Research has shown that more than a million older people are struggling to pay off debts.
Older people facing a debt crisis.
Research shows that as the over 55s reach retirement age, they are struggling to pay off credit cards and mortgages.
The traditional image of older people as being reluctant to take on debt and determined to live “within their means” has come under strain. Partly because of a more relaxed attitude to borrowing from the so-called “baby boomer” generation, it concludes.
The study also found declining returns from savings after the worst downturn since the Great Depression has had an effect. Also, the reliance on interest-only mortgages has played a part.
Fewer older people are borrowing on credit cards or other means than before the financial crisis. However, the average amount of debt they run up has risen by as much as two thirds over six years.
The numbers of older people in ‘problem’ debt have risen.
And the proportion of older people who are classed as having “problem” debt has risen to almost a third of those with borrowings overall.
Another significant finding was those struggling to repay debts were more than twice as likely to experience the breakdown of a marriage or long-term relationship as those who did not.
A higher incidence of depression among those struggling to stay afloat amid growing debts was also noted.
Older generations facing silent debt crisis.
Under-reported and often dismissed amid discussions over lucrative final salary pension schemes, house-price growth. even university grants, it seems the UK’s older generations are facing a silent debt crisis.
Credit card debt levels among people over-55 is soaring by almost 10 per cent a year. Overdraft borrowing for this age group is up too.
According to another study by Nationwide, the problem gets increasingly worse the older we get.
3 years ago, another study pointed to debt levels among 50-somethings of around £4,650, including £2,750 on credit cards. £1,300 through a personal loan and £390 on car finance. This against an annual income of just over £19,000.
By their seventies, the 2,000 people surveyed in that age group were reporting debt levels of more than £31,500, largely because of the £26,850 outstanding on their mortgages. Their annual income came to an average of £21,600.
Since then, debt levels for over 55s has continued to rise.
Debt levels continue to rise.
In 2002 23% of older people were struggling to repay debt. By 2010 that had risen to 28%. That is 1.1 million older people. This was defined in relation to the proportion of their income they spend servicing the debt.
“Debt is commonly assumed to be more of a problem for younger people than for those later in life.”
“Traditionally, older people are seen as living within their means and very reluctant to use credit or get into debt.”
“However, low returns from savings, decreasing annuity rates and rising prices for energy and other basic costs are adding to the financial pressures on many in older age.”
“There may also be generational effects. As those reaching retirement now are more used to credit cards and other forms of borrowing than older pensioners. And financial services have changed over time.”
“For example, recently, the Financial Conduct Authority has highlighted the large numbers of people approaching or in retirement with interest-only mortgages.”
Baroness Greengross, chief executive of ILC, said:
“Without further intervention, problem debt will continue to blight the lives of older people. Impacting on their relationships, quality of life and mental health.”
Debt charity figures have also shown that there is a shortage of good debt advisors. The need for expert debt advice is more urgent than ever before.
The first step to getting help is always good expert advice. “This is what families need. Getting the right help can turn lives around.”
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