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30 per cent of pensioners still in debt


According to new research from YouGov and leading wealth manager Old Mutual Wealth, almost one-third of retired people were still carrying debt at the point they gave up full time work. 

The research, to be published in Old Mutual Wealth’s Redefining Retirement study, revealed that the average amount of debt held at the point of retirement is GBP34,500, however 19 per cent of people had debts of over GBP50,000 and almost one in ten had debts of over GBP100,000.
Mortgage debt is most common, with 21 per cent of people still owing money on their house when they retire. Some 14 per cent owe money on credit or store cards, whilst 6 per cent have unsecured loans.
The pension reforms that came into force in April 2015 provided savers with greater flexibility in how they accessed their pensions. The average amount withdrawn in cash from pension funds by retirees since the reforms is GBP28,000, with 19 per cent of retirees using some of that money to pay off debt.
However, 58 per cent of those who had debt at the point of retirement are still in debt now. 30 per cent still have mortgage debt and 28 per cent still owe money on credit or store cards.
The probability of carrying debt into retirement may come as a surprise to those approaching retirement now, as only around 17 per cent expect to owe money when they decide to retire. Those who do expect to have debt at retirement anticipate the amount to be around GBP33,500, but only 9 per cent expect to owe money on their house.
Adrian Walker (pictured), Retirement Planning Manager at Old Mutual Wealth, says: “We have become a nation comfortable with debt and this follows many people into retirement.  I imagine most people would hope to be releasing themselves from the shackles of debt before they retire, particularly the debt attached to their home. This new data shows the harsh reality that many will not be able to release themselves from those ties immediately, as levels of debt are higher than they perhaps imagine.
“The new pension rules do give people the option of using some, or all of their pension savings to pay off debt, however the amounts being withdrawn are not enough to cover the average that is owed and there could be a detrimental effect on the amount of longer term income available to these consumers.  The data shows that debt planning is just as important as saving and investing in relation to how much income people will have in retirement. Putting a plan together that includes how debt will be managed in the run up to retirement can be best managed with the help of financial advice ”

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