The Over Fifties, Debt and Retirement

Writing by Payplan Media Release - Grantham on Friday 3 October 2008

Over Fifties May Have To Delay Retirement To Clear Debts

New research from Payplan, the UK’s leading provider of free debt solutions, reveals the growing problems that indebted ‘pre-retirees’ (aged 50-60) face as their average unsecured debts soar to £41,400. This is 25% higher than the average unsecured debts of other age groups (£32,700) and paints a gloomy picture for many older consumers as they approach retirement. This research has been carried out with over 40,000 Payplan consumers.

‘Significantly More Debt’

Not only are ‘pre-retirees’ in significantly more debt than other age groups but it also takes them longer to pay back this debt: their average repayment term in a debt management plan is 11 years, compared with 9 years for other groups. This gap has increased by 27%, suggesting that debt for ‘pre-retirees’ is a growing problem and potentially one that will increase as the recent economic turmoil forces up the prices of groceries, utilities and unsecured borrowing.

Other Key Research Findings

  • 14% of Payplan customers that registered between July 2007 and June 2008 were aged 50-60.
  • ‘Pre-retirees’ spend 15% of their total expenditure on utility costs, compared with 13% across all other age groups.
  • The average surplus income* of an indebted 50-60 year old is £307.38, compared with £290.21 across all ages.

Pre-Retirement Debt…Hugely Concerning

Such high levels of ‘pre-retirement’ debt are hugely concerning. Not only are the salaries for this group likely to fall rather than increase over the repayment term but at this age any ’surplus’ income should be saved to cover their retirement - which could last over thirty years.

Managing Director of Payplan, John Fairhurst, comments:

“Most people imagine that as they reach the countdown to finishing work, they will have paid off their mortgage and be busily saving for a comfortable retirement. These figures show that this is simply not the case for many ‘pre-retirees’ and highlights a hugely concerning trend towards indebtedness in later life.

“Indeed, with this group taking an average of eleven years to clear their debts on their existing income, many of our clients will have no option but to delay retirement until they clear outstanding balances and have had the chance to build some type of nest egg.

“Although many people in their fifties are used to maintaining high levels of personal debt they are often just ‘treading water’ with repayments and covering little more than interest charges. If they are to enjoy a reasonable standard of living in later life then it is vital that they have a clear plan in place for becoming debt free whilst they are still working.”

*Surplus: The amount of money left over at the end of the month once all priority debts, such as mortgage/rent and utility bills, have been paid.

About Payplan

Free, confidential advice is available from Payplan (either online or by calling 0800 917 7823), or your local Citizens Advice Bureau, who can help work out a debt repayment plan, as well as exploring what other options are available.

Notes to Editors

Payplan Case Studies

All our case studies are available for interview. For further information please contact Payplan’s Press Office:

Jayne Newton - Payplan
Email: jayne.newton@payplan.com
Tel: 01476 541980, 07812 736861

  • Payplan is helping a 50-year-old postal worker who has £58,954 of unsecured debt. He took loans to fund his daughter’s wedding and spent a lot of money treating his grand-children. He has a mortgage on his house, as well as a secured loan. He is in a debt management plan and is paying £181.32 per month.
  • Payplan is helping a 55-year-old divorcee in £52,277 of debt. She is a full-time, live-in carer and has a mortgaged property which she rents out. Her debts were caused by her business failing. She used credit cards and loans to buy stock and machines. She is in a debt management plan and is paying £319.95 per month.
  • Payplan is helping a 58-year-old man who is retired and lives with his wife in a rented house. The couple have £26,000 of unsecured debt. He was involved in a near-fatal lorry accident which left him with health problems that meant he had to give up work. He is in a debt management plan and pays £126.51 per month.

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