Elderly facing debt-riddled retirement, study shows

Increasing numbers of people are approaching retirement in debt, owing four times as much as their counterparts did more than a decade ago, according to research by charity Help the Aged and Barclays.

The study between 1995 and 2005 found a quarter of people in their late 50s and early 60s increased their debts on average to £3,000 and £2,000 respectively on charge cards and other credit arrangements. These commitments were found to increase the risk of financial difficulties by 26 times, forcing people to work beyond their expected retirement date.

‘This report shows that there are some worrying trends in credit usage that could represent a debt crisis for those coming up to retirement,’ said David Sinclair, head of policy at Help the Aged. ‘We know from working with older people suffering from chronic debt problems that even owing a relatively small amount of money can cause untold misery for those living on a fixed income.’

According to the researchers, unlike borrowers in other age groups, older people use credit cards to cover essentials such as the costs of bills or even to buy food.

Help the Aged said that while credit levels across all age groups are increasing, the borrowing culture will create a ‘double whammy’ for new retirees who face managing credit problems on a fixed income.

Figures from the report show that half of people in their 50s, one in eight over 60s and 4% of people aged 80 to 84 are still repaying a mortgage.

And while arrears on credit commitments are most common among people in their 50s and 60s, those aged 70 or over see utility bills as their main area of difficulty.

‘Help the Aged also recommends that the government introduce automatic payments of benefits to those who may be eligible and that the social fund is radically overhauled so that it meets the needs of the poorest pensioners,’ said Sinclair.

The research was carried out by the Personal Finance Research Centre at Bristol University to support the work of nationwide programme called Your Money Matters, which helps people who are struggling with debts. It was unclear how many retirees were surveyed. The study said it used five national data sets.