The average amount owed by over 55s is £4,400, the figures show. Worryingly, 13% of people approaching retirement age still owe more than £10,000.
Fewer than half of those aged over 55 say they have a plan in place to clear their debts before retiring. Almost a quarter say they don’t know how they will pay off their debts, a further 7% say they expect to delay their retirement so they can afford debt repayments.
When asked how they felt about approaching retirement in debt, a quarter stated that it made them feel ‘anxious’ and ‘unsure’ about how they will manage. More than a quarter said that they were ‘annoyed’ that their retirement will be affected by debt.
Melanie Taylor, spokeswoman for Debt Advisory Centre, said:
"It’s very worrying to see such a high number of people approaching retirement with substantial debts to clear. It’s also concerning to see the lack of planning that some are doing to ensure these debts are paid.
“Most people see their incomes drop once they move from a regular wage to a pension, which usually means they have to change their lifestyle. Trying to make debt repayments with a reduced income means that some pensioners will have to sacrifice more than is comfortable in order to cover priority bills such as a housing costs, utilities and food.
“I would advise anybody reaching retirement age who has concerns about outstanding debts to seek advice on how to put together a manageable repayment plan. The last thing we want to see is people struggling to pay for essentials such as food and heating.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented:
“One year after the Mortgage Market Review (MMR), today’s Bank of England’s data suggests there is much greater confidence in the mortgage market, with all types of mortgage approvals during April considerably above the average for the previous six months. Total approvals are also up 9% compared to last April, suggesting the market is adjusting back to normal now that the MMR has bedded in.
“Remortgage approvals have risen at twice the rate of house purchase approvals over the past year, despite tougher affordability checks which some feared would imprison consumers in their existing deals. Falling mortgage rates have boosted demand in the remortgage sector, and there are significant savings to be had for borrowers moving away from their lender’s standard variable rate (SVR).
“With the election clearly having little impact on mortgage activity, the outlook for the rest of 2015 remains positive. Lenders have a healthy appetite for business, and affordability conditions are being helped by the low rate environment. However, today’s rock-bottom prices can’t last forever and it is likely we’ll see greater levels of mortgage activity as borrowers seek to lock into a preferable rate while they still can.”
