It seems that it’s not just younger people who are struggling with debts through loans and mortgages at the present time, but also many individuals who are nearing, or even in retirement are in a similar situation to the rest of the population of the UK.
According to a recent survey from Key Retirement solutions, a company specialising in equity release products, a third of people in the UK approaching, or in retirement, still have an outstanding mortgage or secured loan on their home, with a total debt of £207 billion. The survey, which was conducted on people aged 55 and over also showed that the average amount of debt for this age group has increased by 20 per cent on a year by year basis.
Although it might be expected that the average value of a loan would decrease as people got older, in actual fact the reverse is true. Between the ages of 55-59 the average loan is just over £29,000, between 60 and 69, 35 per cent still have an outstanding loan with an average value of £23,871. The biggest surprise is that 29 per cent of those aged over 70 still have an outstanding loan or mortgage with an average balance of £45,493.
This shows that rises in the cost of living are having an impact on everyone, not just those who are working. It also demonstrates that retired people are choosing to release equity from their homes through some type of loan or mortgage, rather than sell their home and move into something smaller. The average monthly repayment made by retired people on their loans is £218, even though more than half are receiving an income of £10,000 per annum, or less.
With a large percentage of the current working population saving very little, or in some cases nothing towards their retirement and both company and personal pension schemes losing popularity over the past few years, it looks as though the situation for debt levels in retirement is likely to get worse in the future, with more and more people depending on the value of their home to help provide them with an income in older age.
