Nearly everyone dreams of a comfortable life after they retire; however, research carried out by Prudential suggests that money worries in retirement are a growing problem. Men of 65 years and above, for example, are struggling with an average debt of more than £50,000.
Now more than ever, it seems that people are approaching retirement in debt. The most common problem is credit card debt, with 55 per cent of those set to retire in the near future finding it difficult to clear this type of debt. Mortgages are also a problem, with 53 per cent of retirees having difficulty ensuring theirs is paid off in time.
According to the Consumer Credit Counselling Service (CCCS), current over 55s are in a tough position. They may be sandwiched between two generations that are dependent upon them financially – elderly parents and children still in education. Clients of the CCCS who fall into the over 55 bracket have, on average, more than £25,000 in unsecured debts. It is not hard to understand how this might be a problem when you consider that this age group has an average retirement income of approximately £15,000.
Who can help?
While many people suffer in silence, there is help available from debt charities and other organisations. Clients can talk through their options and settle on an affordable solution to their financial worries; for example, they can explore an IVA through Carrington Dean or another debt solutions provider.
There are a range of options for those struggling to manage their debts as they reach retirement age. One is to delay retirement, which allows additional time to pay debts off while building up a larger pension. Other options might include evaluating assets, such as property. Downsizing or looking into an equity release scheme may be a good way to raise cash and reduce the financial burden.
Lessons for the future
For those already struggling with debt, it is really important that they act fast to ensure this does not spiral out of control. This is where an IVA or similar debt solution can help.
A clear lesson here is that people must regularly re-evaluate their financial circumstances. In doing so, they can more easily anticipate where an issue might arise and hopefully take evasive action.