26% of over-70s have credit card and loan debt which is preventing them from enjoying retirement as they struggle to maintain their standard of living, according to research from Key Retirement.
One in 10 have had a balance they’ve not cleared for more than a year, while 14% are relying on credit cards to boost their income in retirement.
Since 2016 levels of both secured and unsecured debt held by over-65s has increased from £70bn to an estimated £85bn in 2018. Secured debt such as mortgages accounts for £73bn and nearly 40% of 65-74 year olds with an interest only mortgage will struggle when the capital repayment is due.
A combination of inadequate saving, the launch of pension freedoms and unexpected bills have meant pensioners need to rely on borrowing in retirement. 55% of those surveyed say they had to pay unexpected bills on credit cards with car repairs the biggest issue followed by emergency house repairs.
Key is campaigning with independent financial specialist Alvin Hall to highlight the issue and has launched a guide Managing Debt In Retirement outlining how to be more debt savvy both before and during retirement.
Hall said: “A comfortable stress-free retirement is what we all want but debt is increasingly a silent source of worry for too many retirees.
“There’s a saying from my childhood I tell those who feel trapped by debt: we can’t change the past but we can change our future. Breaking through what’s created worry and understanding the problem is the only way to move forward.”
Dean Mirfin, chief product officer at Key Retirement, added: “The issue of debt in retirement isn’t discussed as openly as it should be. However not only is it a problem, it’s a growing one.
“Pensioners worried about debt are not alone. We are all living longer and that means our savings have to last longer and we have to plan more carefully. Helping out family can also rapidly cut retirement funds while pension freedoms make it easier to access cash.”