As many as 14% of retirees with debt still have mortgages to pay off but nearly half owe money on credit cards and a third have an outstanding bank loan.
Clearing this debt is expected to take around three-and-a-half years, according to the specialist over-55s provider Key, which has investigated the retirement prospects of over 1,000 people approaching retirement.
The research comes in the year the State Pension age is set to move to 66 for both men and women.
Will Hale, CEO at Key, said the change, which comes into effect in October, meant it was ‘vitally important’ to understand more about the challenges and aspirations of the ‘Retirement Class of 2020’.
In the course of its research, Key found some of those people retiring with debt were in the red because of last minute unplanned expenses. In fact, 34% of people only began to make definite plans to retire within a year of their intended finish date.
Housing wealth
As an equity release provider, Key was keen to promote the message that unlocking housing wealth was something people should look into when planning their retirement. However, Hale was keen to point it might not suit all people.
“Equity release is not right for everyone but it is vitally important that people are not prevented from considering how their largest asset, their home, can support them in retirement by misconceptions and unanswered questions concerning later life lending options,” he said.
“There is a lot of help available online on how to budget for retirement and working with a financial adviser in the run-up to retirement can make a massive difference in being as retirement ready as possible.”
Worst debtde
People in Wales, Key’s study found, were most likely to retire with debt with nearly half of those questioned expected to be in the red when they finished work.
Despite the high proportion of indebted retirees, they tended to owe among the lowest amount with 11,180 being the average retirement debt in Wales.
Key found the biggest debts were in the North East, where retirees owned an average of £22,900 followed by the South East where the typical figure was £22,400.
