More people reaching retirement age in debt - survey » Communities » 24dash.com

More people are reaching state retirement age in debt - and borrowers approaching it owe four times more than their counterparts a decade ago, a study said today.

The survey, by Help the Aged and Barclays, found that a quarter of people approaching retirement age have outstanding consumer credit commitments.

It said there had been "considerable growth" in sums of money borrowed by credit users, including older people.

Credit users aged in their late 50s and early 60s owed on average £3,000 and £2,000 respectively in 2005 - at least four times the amount owed by their counterparts in 1995.

UK consumers owe more than £1 trillion in secured and unsecured borrowing.

Those with the highest incomes were most likely to be using credit - but a quarter of over-50s living in the poorest 40% of households in Britain had outstanding credit commitments.

Across all ages, between 1995 and 2005 the average amount of outstanding debt for those with any credit rose three times.

The fastest growth was for those aged 55 to 59 and 60 to 64.

Help the Aged voiced concerns about the impact on pensioner poverty and said the Government's financial education plans should meet older people's needs.

It said new retirees face the "double whammy" of living on a fixed income while managing existing credit commitments.

Help the Aged head of policy David Sinclair warned of a "ticking timebomb".

He said: "This report shows that there are some worrying trends in credit usage that could represent a debt crisis for those coming up to retirement.

"We know from working with older people suffering from chronic debt problems that even owing a relatively small amount of money can cause untold misery for those living on a fixed income."

The charity said the Government should introduce a strategy to continue progress in tackling pensioner poverty.

It called for an overhaul of the Social Fund to meet the needs of the poorest pensioners.

The report was put together from a variety of sources, much of the data collated being UK-wide, Help the Aged said.

The study showed that unlike borrowers in other age groups, older people use credit cards to cover essentials such as bills - or even food.

It found that levels of credit use may already be forcing people to delay the timing of retirement.

People aged 45 and over and in paid work in 1995 who owed £3,000 or more in unsecured credit were half as likely to have retired in the next 10 years as those with no credit commitments.

Half of households headed by someone in their 50s, one in eight over-60s and 4% of people aged 80-84 were still repaying a mortgage.

The level of outstanding mortgages increased "substantially" between 1995 and 2005.

The fastest growth was among mortgagors aged in their 60s, for whom the level of outstanding mortgages trebled in the 10 years up to 2005 - from £10,000 to £30,000.

Arrears on credit commitments were most common among people in their 50s and 60s, and among those aged 70 or over, utility bills were the main area of financial difficulty.

And there was an increase in the proportion of people reporting financial difficulties in the past five years among those aged 70 to 74.

The study was commissioned from the Personal Finance Research Centre at Bristol University to support the work of a nationwide money management programme, called Your Money Matters, run by Help the Aged in partnership with Barclays.

The programme offers older people free money management and debt advice.

It helps people who are struggling with problem debt and those who are having difficulty managing their finances on a fixed income.

While the report showed that only a minority of older people suffer from problem debt, 17 advisers across the UK are helping older people deal with more than £5 million of debt.

They have reduced the debt by £1,423,478 and increased benefit take-up by £582,493.

Barclays sponsorship and donation manager Alan Hands said: "This report underlines the importance of programmes such as Your Money Matters.

"We recognise that many older people are facing a range of financial difficulties and that dealing with money issues and debt can be very stressful.

"Through the Your Money Matters programme and the expertise of our volunteers, we hope to help lots more older people to overcome these difficulties and regain control of their finances."