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One in five to retire in debt

One in five to retire in debt

Category: Retirement

Updated: 26/01/2012
First Published: 26/01/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
One in five Britons planning to retire this year will do so with the spectre of debt hanging over them.

Research conducted by Prudential found that 18% of the retirement Class of 2012 will have to deal with paying debts.

The percentage of people expecting to retire in debt has actually fallen slightly from last year (20%) but the average amount of debt that will be carried over into retirement has increased noticeably.

Whereas last year the average debt of retirees amounted to £33,100, this year the figure is £38,200.

Outstanding mortgages and credit card bills make up the bulk of the Class of 2012's debt.

Half of those with debts owe money on their home loan and more than half (51%) are struggling with outstanding credit card bills.

And retirees expect to raid their retirement savings by around £260 a month to cover their debts – the equivalent of a fifth of the average savings set aside for life after work.

Paying off debt could take this year's retirees an average of nearly four years and eight per cent of those who will still owe money when they retire in 2012 say that they will never be able to pay it off.

One in four (24%) say that they will be making repayments of £500 or more a month.

But Prudential has told retirees that they have help at hand to deal with their debts.

"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 Citizens Advice Bureau," said Vince Hughes-Smith, retirement income expert at Prudential.

"Retiring with outstanding debts could be a sign of a lack of financial planning. It is important therefore for those still at work to save as much as possible as early as possible, and to consult a financial adviser to help them plan for a comfortable retirement."

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