Retirement is supposed to be a time of life when people can enjoy what they have achieved during their working lives, but many retirees are finding themselves with debts still to be paid off.
In fact, one in six (17%) people planning to retire this year will have outstanding debts averaging £24,800, according to new research from Prudential.
Prudential's Class of 2014 study shows that these debts could take an average of four years to clear, with monthly repayments averaging £220 – a clear drain on a retiree's income.
For over 25% of those retiring this year these payments will be over £400 and 18% of people expect to take seven years or longer to clear their debts, with a further 2% believing they will never be debt-free.
Credit cards and mortgages are the main sources of debt, with 56% owing money on plastic and 44% not having fully paid off their mortgages.
However, it's not all doom and gloom as the average amount retirees owe has fallen by 35% over the past two years – it stood at £38,200 in 2012 – while the proportion of those with outstanding loans and overdrafts has dropped considerably.
Stan Russell, a retirement expert at Prudential, said: "Our new research shows a welcome downward trend in the debts people are taking with them into retirement.
"However, retirement incomes remain under pressure and it is clearly sensible where possible to ensure that debt repayments do not eat into incomes too much or for too long. Paying off debts as early as possible – and ideally while still working – will help to increase disposable income in the early years of retirement."
Take a look at our retirement guides
12 Steps to get debt-free in 2014
Dealing with debts
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