Problem debt is on the increase among older clients. Fiona Murphy asks: What are the most common types of debt and how could this be mitigated in the advice process?
Amid falling annuity rates, poor savings and the relatively low state pension, it seems debt is another huge issue affecting retirees’ standard of living.
A recent report titled Tales of the Tallyman: Debt and problem debt among older people from the International Longevity Centre – UK (ILC-UK) and Age UK has warned three in 10 (28%) of the 1.1 million older people in debt are considered to be in “problem debt” and are struggling to repay.
Some 10% of older people have unsecured debt and are paying over £85 a week to service their debt. Bearing in mind the state pension will soon go up to approximately £140 a week, this would scoop up a huge proportion of most people’s retirement income.
StepChange Debt Charity also recently said while older people make up a small proportion of their client base, people aged 60 and over seeking their help had on average higher debts than any other age group. Younger people were also identified as able to manage their debt better through online self-help tools.
It’s no secret that debt for people in or approaching retirement can cause significant hardship as the options to repay debt at this stage in life are often limited.
Aviva head of at-retirement, Roger Marsden says: “For many people short-term borrowing is a necessary step to manage living costs, deal with unexpected expenses or treat themselves to a holiday.
Is the US overheating?
What made financial headlines over the weekend?
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews