One In Five To Retire With Loan Debts
Retirement is supposed to be a time when people can sit back and relax, without having to worry about their finances and making ongoing loan repayments. But aside from the fact that many individuals have not made adequate provision for their retirement income, around one in five are likely to retire with outstanding loan and card debts.
Research conducted by the Prudential has found that somewhere in the region of 18 per cent of people who plan to retire this year, will do so with existing debts hanging over them, either in the form of a home owner loan, personal loan or credit card bills.
Although the number of people entering retirement with loan debts has actually dropped slightly since last year, the level of individual debt has increased significantly. Last year, the average outstanding loan debt was £33,100, but this is expected to increase to £38,200 during this year.
The main sources of these retirement debts are made up of existing home owner loans and mortgages and credit card bills.
The average retiree with outstanding loan debts is expected to be dipping into their retirement savings to the level of around £260 per month in order to service their loan and card repayments, but some individuals have said that they will be paying as much as £500 per month on loan debts.
Paying off their loan debt is likely to take an average of around 4 years for a typical retiree, but some have admitted that they are never likely to ever clear their loans and credit cards completely.
Vince Hughes-Smith of the Prudential said “With a manageable repayment programme in place, debts need not become an issue for this year’s retirees and there is plenty of help available through the Money Advice Service and Citizen’s Advice Bureau.”
