Living costs are continuing to rise, with over 4.3m people aged 50-64 worried that they could be pushed into problem debt, according to new research.

A third of over-50s (33%) questioned by debt charity StepChange said that they don’t feel confident about their financial situation and are concerned that they may not be able to cover rising living costs.

We spoke to Sue Anderson, head of media at StepChange, about how and why people fall into debt, and what steps you can take if you’re worried about your finances.

What is debt?

Debt is essentially any money you’ve borrowed, usually to fund a purchase you otherwise wouldn’t have been able to afford. Over 62% of UK households have some form of debt, whether that’s a mortgage, car finance, or a credit card or loan, or a combination of these.

It’s a common misunderstanding that all debt is bad. It actually makes up a huge part of the economy and for millions of people can be a useful, and sometimes the only, way to buy expensive items, build your credit score and invest in your financial future.

Of course, the other side to this is what we call ‘problem debt’, where someone is unable to meet their repayments. What makes debt so tricky is that often there’s a very fine line between staying on top of your debts and them spiralling out of control. When living costs are rising, as they are now, it can be especially difficult to keep up with debt repayments.

Debt among the over 50s

Everyone’s circumstances are different, so there’s no ‘one size fits all’ position when it comes to how much debt the over 50s have.

However, from a general perspective, those aged 50 and over are more likely to own their own home and tend to have fewer personal loans for things like cars and other large purchases. The types of debt they might struggle to stay on top of therefore may be things like utility or credit card bills, or their mortgage if they are still paying it off.

While this might be the case for the majority of people in their 50s and beyond, many face the same financial challenges as younger generations, especially if they are renting. Sue Anderson of StepChange said: “What we’ve also got is this cohort of people in their 50s who might have very similar characteristics to those in younger age ranges, particularly for people who aren’t homeowners. With this group, it’s likely that they are subject to a lot of the same vulnerabilities, as those in their 20s or 30s.”

One of the biggest misconceptions is that problem debt is caused by poor financial management or habitual overspending. The reality is that while someone’s financial resilience (their ability to cope with changes to their finances) might be affected by the way they manage their money, the biggest reason people find themselves with problem debts is because of unexpected life events, also known as life shocks. These might include redundancy, a relationship breakdown, the death of a loved one or an unexpected illness.

While it may not be something you want to think about, unfortunately, it’s likely that many of us will experience at least one of these unexpected life events in our 50s, 60s or 70s. 

Sue continues: “One of the things we know is that when you have a life shock, it’s a real trigger for debt, and the more of them you have in a short time period, the bigger the trigger is likely to be. 

“While it’s not fun to think about, statistically, these things are more likely to happen as you get older, but it is something you can plan for, and start building your financial resilience. 

“However, if you have found yourself in the midst of a shock, without any buffer, we encourage you to take advice early. There is a tendency across all age groups to not reach out until they’ve reached a point of desperation, but the advice across all charities is that the sooner you turn to them, the sooner they can help.”

What can you do if you’re worried about your finances?

Money worries can feel incredibly isolating, and debt in particular is something that still carries a stigma for many people. While it can feel tricky to talk about, if you’re starting to struggle or can see an issue arising, then the best thing you can do is seek help. The sooner you talk to someone, the sooner you can start working on your finances.

A myth many people believe is that you need to be in dire straits before you can ask for help, but this is not the case. Sue Anderson said: “All charities are likely to tell you the same thing, whether they’re health charities, mental health charities, or debt ones. They would all say that they would like people to turn to them as soon as you have a hint of difficulty.

“Turning to charities, such as StepChange, at this point can help you build a foundation for good financial health, but you’ll also be well equipped and better prepared if the scenario you’re worried about materialises, which could help you recover more quickly.”

There are plenty of free sources of advice available and many charities and organisations can help you understand your debts and get on top of them. These include:

Whatever happens, don’t suffer in silence, as struggling with debts on your own can take a real toll on your mental health. If you are finding it hard to cope, our article Are money worries affecting your mental health? explains where to go for help if you need someone to talk to.

How can debt advisors and charities help?

How a debt advisor or charity can help you will vary depending on the type of debts you’re struggling with:

If you’re worried about rising living costs

Rising food, fuel and energy costs are enough to worry anyone, so if you’re concerned your debts are becoming unmanageable, then talking to a debt charity or advisor might help you to take stock of your finances, both for your current needs and for the future.

Sue Anderson said: “Human nature is such that, a lot of the time, people think in the very short term. One reason people sometimes need a debt solution is that they took out a financial product that addressed their immediate needs in the past without a view of what that meant for their future.”

With this in mind, a debt charity or advisor might help you to go through your outgoings, so you can see exactly how much you’re spending each month and if you have anything left over that could contribute towards building your financial resilience, whether that’s by paying down debt, building savings or paying more into a pension pot.

If you find that you have very little to spare, it’s worth thinking about where you can cut back on your spending. However, many of us have already done this, so the reality may be that there isn’t anything left to trim. If this is the case, a debt advisor could help you explore some options you might not have previously considered and may be able to help you negotiate more affordable repayment plans with the organisations you owe money to. Remember, you don’t need to get to the point of desperation before asking for help.

If you think you have problem debt

If you think your debts have become a problem, or you have started to miss payments on any financial product, then as mentioned it’s incredibly important to talk to someone about it as soon as possible.

Admitting to yourself that you might be in trouble might be the hardest step to take, but it could be the most important one. While many people may feel ashamed of their financial situation, try to remember that none of us know what the future holds, so if life deals you a bad hand it’s completely normal for your finances to take a hit.

Our articles How to take control of your debts and Serious debt: your options explained outline some of the steps you might want to consider taking if you think your debts are starting to become unmanageable.

Have you ever spoken to or used the services of a debt advisor or charity? What words of advice would you give to someone worrying about their financial situation? We’d love to hear from you. You can get in touch on the Rest Less Community, or leave a comment below.

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