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Brits Set to Retire £66 Billion in the Red
12th August 2008
- Over 1 in 3 ‘over-55’s have outstanding unsecured debts averaging over £11,000[2] per head
- Over 70’s most at risk with total unsecured debt exceeding £22 billion[3]
- Average personal loan debt is over £8,700[4] for those aged 55 and over
- Over £28 billion[5] owed by those aged 55+ on credit cards alone
More than 1 in 3[6] of the UK population over the age of 55 have outstanding unsecured debts and could be heading towards retirement with a whopping £66 billion[1] in the red, averaging £11,106[2] per head, reveals a new report from Key Retirement Solutions, the leading independent equity release specialist.The analysis based on 4,507 people in the UK aged 55 and over who released equity in their home with Key Retirement Solutions in 2007, reveals the average unsecured debt across loans, credit cards, and overdrafts to be broken down as follows:
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Personal loans: almost one in four have outstanding loan payments owing £8,766[4] on average per head
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Credit cards: a fifth have outstanding card debts and owe £8,358[7] on average per head
- Overdrafts: just 3% are in the red, but £3,667[8] is owed on average per head
The situation worsens when taking into account the average outstanding mortgage debt which stands at £37,316[9] per head for this age group.
The greatest concern is that the further people reach in retirement the deeper in debt they seemingly become. The total unsecured debt for those aged 55-59 is over 2.5 billion[10] this takes on a huge increase of 747%[11] reaching a total of over 22 billion[12] for the over 70s, which is on average £10,659[13] per head with an average monthly payment per head of £244[14]. As voluntary pension contributions made by UK adults have almost halved in the past 12 months,[15] and the costs of goods and services purchased by pensioners have rocketed by 36% since 1998[16] – faster than the rise in the Retail Price Inflation which has shot up by 32%[17] over the same period, this is a trend which looks likely to continue for generations to come if their outstanding debts continue.
Dean Mirfin-, Business Development Director at Key Retirement Solutions said: “As the cost of living is on the up, these figures, even if they are only part reflective of pensioners as a whole, are of real concern. Retirement should be a time to enjoy yourself after all those years of hard work, yet 1 in 20[18] people in their 60s, 70s and 80s admit to constantly struggling to keep up with financial commitments or having fallen into arrears.
“The cost of living for the elderly has surpassed inflation over the past decade[19] therefore it is more important than ever that consumers are aware of the dangers of approaching retirement with such large amounts of debt.”
Looking at credit card debt alone, the amount owed by those aged 55 and over reaches over a £28 billion[5]. The average debt for people over 60 has reached £8,372[20] an increase of £821[21] year on year. As Britain’s interest repayments have soared to £94.4bn[22] in the last 12 months and more than five million[23] people have missed monthly payments on credit cards in the past six months, incurring an average of £12[24] a time in late payment fees, this is one of the most dangerous forms of debt.
Chris Tapp, Director of charity Credit Action, comments on Key’s findings: “In recent years there has been a ‘buy now, worry about it later’ culture in the UK when it comes to borrowing, particularly on unsecured forms of credit. For many pensioners today these figures show it’s a case of ‘bought then, worrying about it now.’ With the cost of living increasing dramatically - particular as winter approaches and fuel costs mount up - it is vital that those struggling are given the help they need to ensure that people aren’t trapped by debt but are given the necessary advice and support to enable them to stay in control of their money and their lives.
Table one: Shows unsecured debt per person among the 55s and over and corresponding average monthly payments per person
| Age group | Credit card | Average monthly payment | Personal loan | Average monthly payment | Overdraft | Average monthly payment | Other | Average monthly payment |
| 55-59 | £8,034 | £214 | £9,411 | £233 | £2,100 | £40 | £3,050 | £75 |
| 60-64 | £9,036 | £227 | £9,047 | £237 | £3,795 | £17 | £5,487 | £64 |
| 65-69 | £7,890 | £226 | £8,702 | £217 | £4,062 | £36 | £20,809 | £51 |
| 70+ | £8,232 | £214 | £8,477 | £211 | £3,420 | £25 | £20,463 | £56 |
For anyone looking to release equity from their home to help ease the financial burden in retirement, our independent guide to equity release is the best place to start. This can be obtained by calling 0800 531 6010 or visiting our website www.keyrs.co.uk where the guide can be downloaded.”
Notes:
1 According to the Office of National Statistics, the total UK population of over 55s based on latest population figures (2006/7) is 16,837,900. According to Key Retirement Solutions’ debt report 35.66% of over-55s that have come to them in 2007 for equity release advice have outstanding unsecured debt (6,004,395 people). This sum multiplied by the average unsecured debt of £11,106 equals £66,687,371,859.
2 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. Average unsecured debt amounted to £11,106.
3 According to the Office of National Statistics, the total UK population of over 55s based on latest population figures (2006/7) is 16,837,900. According to Key Retirement Solutions’ debt report 12.34% of 70+ that have come to them in 2007 for equity release advice have outstanding unsecured debt (2,077,185 people). This sum multiplied by the average unsecured debt of £10,659 (for 70+) equals £22,140,695,301.
4 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. Average personal loan debt amounted to £8,766.
5 According to the Office of National Statistics, the total UK population of over 55s based on latest population figures (2006/7) is 16,837,900. According to Key Retirement Solutions’ debt report 20.19% of over-55s that have come to them in 2007 for equity release advice have outstanding credit card debt (3,399,572 people). This sum multiplied by the average credit card debt of £8,358 equals £28,413,622,776.
6 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. Of these, 35.66% had debt (excluding mortgages).
7 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. Average debt on credit cards amounted to £8,358
8 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. 127 of who had overdraft debt 127/4507 x 100 = 2.82 (3%). Average overdraft debt amounted to £3,667.
9 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. The average outstanding mortgage debt among these was £37,316.
10 According to Key Retirement Solutions’ debt report the total percentage of unsecured debt held by the UK population of those aged 55-59 that have come to them in 2007 for equity release advice is 3.92%. According to Key Retirement Solutions’ debt report the total of unsecured debt held by the over 55’s is £66,687,371,859. 3.92% of this sum equals £2,614,055,021.
11 According to Key Retirement Solutions’ debt report the total percentage of unsecured debt held by the UK population of those aged 55-59 that have come to them in 2007 for equity release advice is 3.92%. According to Key Retirement Solutions’ debt report the total of unsecured debt held by the over 55’s is £66,687,371,859. 3.92% of this sum equals £2,614,055,021. According to Key Retirement Solutions’ debt report the total percentage of unsecured debt held by the UK population of those aged over 70 that have come to them in 2007 for equity release advice is 33.20%. According to Key Retirement Solutions’ debt report the total of unsecured debt held by the over 55’s is £66,687,371,859. 33.20% of this sum equals £22,140,695,301. The difference between this sum and the sum for the 55-59 age group (£2,614,055,021) is £19,526,640,280. This equals an increase of 747% (£19,526,640,280/£2,614,055,021 x 100 = 747%.
12 According to Key Retirement Solutions’ debt report the total percentage of unsecured debt held by the UK population of those aged over 70 that have come to them in 2007 for equity release advice is 33.20%. According to Key Retirement Solutions’ debt report the total of unsecured debt held by the over 55’s is £66,687,371,859. 33.20% of this sum equals £22,140,695,301.
13 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. The average outstanding unsecured debt among the over 70s was £10,659.
14 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. The average monthly payment among the over 70s was £244.
15 Sourced from Credit Action August 2008
16 Sourced from Clerical Medical July 2008
17 Sourced from Clerical Medical July 2008
18 Sourced from Credit Action August 2008
19 Sourced from Clerical Medical July 2008
20 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. The average outstanding credit card debt among the over 60s was £8,372..
21 Key Retirement Solutions collected data from 4,507 over-55s releasing equity from their home in January – December 2007. The average outstanding credit card debt among the over 60s was £8,372 compared to last years figure of £7,551 this is an increase of £821.
22 Sourced from Credit Action August 2008
23 Sourced from Credit Action August 2008
24 Sourced from Credit Action August 2008
For more information, please contact:
Dean Mirfin (Business Development Director)
Key Retirement Solutions
07879 678737
Louise Willcox
Lansons Communications
Tel: +44 (0)20 7294 3676
louisew@lansons.com
