Half of over-55s in debt, new research finds

Debt is becoming a growing concern for UK adults approaching retirement, with 48% of over 55s having ‘some sort’ of outstanding debt.

These figures, part of a new study from Aviva, also show that almost one in ten of adults in the UK – just over 5 million people – ‘haven’t got a clue’ how much they owe, with this number rising to more than one in six in those aged over 45. 

The most common type of debt is credit card debt, affecting 30% of over 55s, followed by personal loans and then overdrafts. More than one in 10 (11%) say they have outstanding mortgage debt, and 10% say they have unpaid household or utility bills.

Almost a third of Brits said that they had had to pay an unexpected bill of £850 or more in the past 12 months, which ONS attributes to the cost of living crisis and the ongoing financial impacts of Covid. Only 24% said they used emergency savings to cover this bill, with 19% saying they used a credit card to pay off what they owed, 11% saying they asked family or friends for help and 8% having used a loan or their overdraft. A further 5% said they took out a payday loan, and another 5% cashed in some of their pension savings.

It’s not necessarily the end of the world if you are approaching retirement with a certain level of debt, but it can certainly have a detrimental impact on your financial security during what is supposed to be a relatively stress-free period, as debts can accumulate interest, eat into your pension, and of course, be a huge mental strain.

Alistair McQueen, Head of Savings and Retirement at Aviva said: “Interest rates have risen to levels we haven’t seen since 2008 – and are expected to rise further. The cost of debt is now centre stage, and millions may be having to rethink their retirement plans.

 “Starting to think and plan further ahead as early as possible is a small step that can make a big difference in the long-term. Individuals can take some positive actions to reduce their debt before entering retirement, such as consolidating their debt, paying off high-interest loans or switching to a cheaper rate, alongside reducing unnecessary expenses or taking out a debt management plan.

 “Also, if appropriate, people could work with a financial advisor to create a full retirement plan that takes their debt into account and ensures that they have enough income to cover their expenses and enjoy their retirement years.”

With one in five people saying they expect to carry some level of debt into retirement, you may want to start planning or seeking advice to see if you can ease your situation. One positive trend Aviva observed was that more people (13%) said they were seeking advice from debt services or helplines, compared to just 7% in 2021.