2020 retirees face significant debt challenges
The “Retirement Class of 2020” faces significant debt challenges with more than one in three people retiring in the red with average debts of £17,460, according to Key.
The equity release business found that, of those in debt, 48% still owe money on credit cards, 31% have an outstanding bank loan and 14% still have a mortgage.
While the average amount owed by those in debt is £17,460, 8% owe over £20,000 and 4% do not actually know how much they owe.
On average they expect to take around three-and-a-half years into retirement to be debt-free. However, one in eight of those in debt expect to owe money for nine years or more with a third of them saying they will never pay off the money they owe.
People expecting to retire in Wales are the most likely to have debts – nearly half (48%) expect to retire in the red but the average amount they owe is among the lowest in Great Britain at £11,180.
The biggest average debts are owed in the North East at £22,900 and in the South East at £22,400 with people retiring in Yorkshire & The Humber owing the least on average at £9,000 while those in the North West also have lower than average debts at £10,100.
Wealth in property
Despite many retirees still needing to repay debt, over-65s have more than one trillion pounds worth of unmortgaged housing equity. And this money could potentially be unlocked to help support them in retirement.
Will Hale, CEO at Key, said: “With changes to the state pension due to start coming into effect this year, it is vitally important to understand the challenges and aspirations of the “retirement class of 2020”.
“Today’s findings suggest that while most people work hard to retire debt-free, this is not the reality for one in three people. Equity release is not right for everyone but it is vitally important that people consider how their largest asset, their home, can support them in retirement.”