UK retirees leaving work in more than £30k debt

The Momentum UK Team 23 January 2013

UK retirees have successfully reduced the amount of debt they own upon retirement. However with nearly one in five retiring in debt, the average amount held is still more than £30,000.

The figures, released by the Prudential show that 18% of retirees will leave full time work with an average debt of £31,200. This however is down on last years figures of £38,200. This is a reduction of nearly one fifth.

The type of debt has also changed, shifting towards unsecured borrowing. More than half owe money on credit cards, bank loans and outstanding overdrafts. Last year one of the largest sources of debt was mortgages, however this has experienced a reduction, falling from 50% to 43%.

Male retirees have reduced their overall debt the most,  but they still have more debt on average than female retirees. The average debt of male retiree dropped from £45,300 in 2012, to £33,800 this year.

Female retirees also marked a reduction in their debt from £29,400 to £28,100. In 2013, 16% of females will retire with debt, this is compared to 20% of all male retirees.

All this debt amounts to the average monthly repayments of £215. However around 22% of those retiring in debt will be paying £400 a month or more, while 12% say that they do not know how they will ever pay it off.

Vince Smith-Hughes, from Prudential said:

"The fall in average debt owed by this year's retirees is a welcome sign that people are paying off some of the money they owe before they stop working.

"But when people's finances are still under pressure, with expected retirement incomes at a six-year low, it's important to ensure debt repayments do not eat into retirement incomes too much or for too long.

“Paying off debt as early as possible - preferably while still working - will help to ensure that retirees have more disposable income, in turn enabling them to enjoy a more comfortable retirement."