Some answers to the age-old problem of debt
DEBT is spoiling retirement for one in five over-65s as they struggle to make ends meet. One in seven rely on credit cards to boost their pension income and keep on top of bills, claims a study by Key Retirement.
Even more worrying is that well into their retirement, pensioners are still trying to repay huge amounts of debt.
More than half of 75 to 84-year-olds with an outstanding mortgage balance have interest-only deals so they are not reducing the debt. On average, these people have an outstanding balance of £125,000.
Independent financial expert Alvin Hall says: “Debt is increasingly a silent source of worry for too many retirees.
“Many people struggling with money worries find asking for help difficult. They are embarrassed, they don’t want to be judged and they don’t like talking about money.”
The research from Key Retirement comes hot on the heels of analysis from StepChange Debt Charity that found the average age of people seeking help with money woes was 70.
Of those unable to keep on top of debt repayments more than three-quarters had borrowed the money to repay an outstanding mortgage. Meanwhile, more than a third had taken out credit to repay existing debt and got themselves even deeper into the red as a result.
DO A BUDGET: Know what you have coming in each month and where your money goes. Go through everything and ask: Can I find it cheaper? Do I need it? Switch if you find a better deal.
PRIORITISE PAYMENTS: Focus on the most expensive debt first – that’s
DOWNSIZING: If you own your own home consider selling and moving to a smaller property or one in a cheaper area.
CLUTTER INTO CASH: Over a lifetime we build up lots of household items that simply collect dust. If we look with objective eyes, we realise many of them are no longer useful. Consider selling them at a boot sale or online via eBay.
KEEP EARNING: As we live longer and continue to be more active many people aren’t ready to give up work. Others need the income to keep up with rising costs.
DIP INTO YOUR PENSION POT: Think carefully – don’t do this too early and too quickly or you could pay too much tax or run out of cash and struggle in later years.
RELEASE EQUITY: You could unlock some of the equity tied up in your home via an equity release plan.
Get Key Retirement’s free guide Managing Debt in Retirement at debtinretirement.co.uk, or call 0800 208 0958.