THE GROWING debt crisis gripping the nation will mean one in five people in Yorkshire who are retiring this year will still have debts to pay off with many financially-stricken households fearing they will never clear what they owe.
A study published today has painted a bleak picture for people planning to step away from employment as they contend with escalating money worries in later life.
The research by Prudential has shown that nationally as many as 25 per cent of people planning to retire in 2017 expect to do so in debt, owing an average of £24,300.
The worrying trend is mirrored in Yorkshire where 19 per cent of people about to embark on their retirement will have to contend with debts, although the figure in London is the highest nationally at 44 per cent.
The proportion of people retiring in debt this year is a record high for Prudential’s annual survey, which first started monitoring the situation in 2011.
Vince Smith-Hughes, a retirement income expert at Prudential, said: “For most people the move from work into retirement will see them having to cope with a drop in their income. So having to use precious retirement income to pay off debts could make life even more tricky for the newly retired.
“With this in mind, it is a worry that we’ve seen a big jump, not only in the proportion of retirees with outstanding debt but also the amount that they owe.”
Mortgages have become a bigger source of debt for people approaching retirement. Nearly two-fifths of those expecting to retire in debt this year still owe money on property, up from a third when Prudential carried out similar research last year.
Strong house price growth in recent decades has meant many people are still paying off their mortgages as they head into old age.
Credit cards also remain a major source of debt, the report found, with more than half of those with debts still owing money on their plastic as they near retirement.
The average amount of debt is still lower than a peak of £38,200 recorded in 2012 – although 2016 is the first year since 2012 that there has been a year-on-year increase in the typical amount owed.
When Prudential carried out similar research last year, it found that one in five of people retiring in 2016 expected to do so in debt, typically having £18,800 to pay off.
Those retiring this year with debts typically expect it will take them another three-and-a-half years to become debt free.
But one in six expect to take seven years or more to pay off their debts – and one in 14 believe they will never fully repay the amount they owe.
Women planning to retire this year with debts tend to owe more than men – but men are more likely than women to have debts, the research found.
Some 28 per cent of men retiring this year expect to have debts outstanding, compared with 21 per cent of women.
Meanwhile, a seperate study published yesterday revealed that families in the UK have been getting healthier, with spending on alcohol and tobacco falling by a third over the last decade.
The Family Spending Survey showed that households spent an average of £11.40 a week on the substances in 2015/2016 – down 42 per cent from £19.50 in 2001/2002.
The Office for National Statistics said the falling numbers of smokers was likely to have caused the decrease.
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