Are you among the one in four people expecting to retire in debt in 2017?
PUBLISHED: 09:08 17 February 2017 | UPDATED: 09:08 17 February 2017
ARCHANT EASTERN DAILY PRESS (01603) 772434
One in four people retiring this year are expected to do so in debt, owing an average of £24,300, a report has found.
According to Prudential, some approaching retirement fear they will never clear what they owe.
The proportion of people retiring in debt this year is a record high since Prudential starting asking the question in its annual survey in 2011.
Mortgages have become a more common source of debt, with 38% or those expecting to retire in debt still owing money on a house – up from 33% last year – as a result of strong house price growth in recent decades.
The report – which surveyed 1,000 people approaching retirement – found credit cards also remain a major source of debt, with 51% of those with debts still owing money on their plastic as they near retirement.
The average amount of debt is still lower than a peak of £38,200 recorded in 2012 – although 2016 is the first year since that there has been a year-on-year increase in the typical amount owed.
When Prudential carried out similar research last year, it found one in five (20%) of people retiring in 2016 expected to do so in debt, typically having £18,800 to pay off.
Those retiring this year with debts typically expect it will take them another three-and-a-half years to become debt free.
But one in six (16%) expect to take seven years or more to pay off their debts – and one in 14 (7%) believe they will never fully repay the amount they owe.
Vince Smith-Hughes, a retirement income expert at Prudential, said: “For most people the move from work into retirement will see them having to cope with a drop in their income. So having to use precious retirement income to pay off debts could make life even more tricky for the newly retired.
“With this in mind, it is a worry that we’ve seen a big jump, not only in the proportion of retirees with outstanding debt but also the amount that they owe.”