'˜Impossible choices' for the over-50 generation forever in debt

Rather than heading into a financially secure retirement, a survey by Saga Personal Financial has revealed that 12 per cent of Yorkshire’s over-50s still have a mortgage, with an average of £53,000 to pay.

And with more of Yorkshire’s over 50s heading into their later years with debt, a Leeds-based charity has warned that parents are being faced with “impossible choices” of taking on more credit or cutting down on essentials.

Research reveals that a third of over 50s in Yorkshire are “second lifers” - those who have had children with a second partner following a previous long term relationship - and it is impacting on finances, with those with a new family likely to have a bigger mortgage debt of up to £80,000.

What’s more, 13 per cent of the region’s over 50s have loan debt on top of their mortgage - owing an average of £8,300.

Over 50s in Yorkshire say they will be on average 67 by the time they have paid off the mortgage

The survey of almost 9,000 people also revealed that five per cent of people in Yorkshire had their last children when they were aged over 40 - leaving people in their late 60s saddled with paying out for their teenager’s driving lesson and university fees, Saga said.

Chief operating officer at Saga Personal Finance, Jeff Bromage, said that the cost of raising a child “is continually increasing” and people need to keep a close eye on their finances to ensure they are getting the best deals.

But Leeds-based national debt charity StepChange warned the pressures of balancing household finances could be “overwhelming”, with the “credit safety net” the only solution for those without savings.

Head of policy at the charity, Peter Tutton, said: “Nearly half of the people who come to us are over the age of 40 and those still raising children face an average budget deficit of £44 and debts approaching £16,000.

“We need better protections for people who find themselves in difficulty. A statutory extended ‘breathing space’ guarantee, where interest and charges are frozen and enforcement action is halted when they take debt advice, would enable people to get back on their feet quickly and avoid falling into problem debt.”

The survey comes as Liverpool Victoria (LV=) has called on the Government to scrap stamp duty for people downsizing their homes to raise money for retirement. Its research showed that more than a third of people approaching retirement are set to be “property pensioners” - relying on money tied up in their home to help give them a retirement income. But it can typically trigger a stamp duty bill of £4,600, based on average house prices.

LV= said waiving or discounting stamp duty on this type of house sale could also benefit younger home buyers by allowing “empty nesters” to move and increasing the supply of larger homes.