People are retiring with less debt than last year

Picture: Gareth Fuller/PA Wire
Picture: Gareth Fuller/PA Wire
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ALMOST a quarter of people in Yorkshire who plan to retire this year will do so with outstanding debt, a new report has found.

In total, 23 per cent of potential retirees in the region said they expect to be in the red, higher than the national average of 20 per cent.

Across the country, people retiring this year are set to have £3,000 less debt than those who ended work in 2015 - owing £18,800 on average, 14 per cent lower than the typical debt of £21,800 last year.

Prudential’s research showed women will retire with less debt than men, £17,800 - a sharp £7,000 fall compared with 2015, and compared with the virtually unchanged men’s debt of around £19,600.

Last month, research by HSBC showed that almost half of those in Yorkshire who want to retire in the next five years say their circumstances will not allow it - with most, 71 per cent, saying they had not saved enough.

People retiring in debt in 2016 typically expect it will take three and a half years to pay off what they owe, Prudential said, but more than one in 10 say it will take seven years or more, and one in 12 believe they will never be debt-free.

The average level of retiree debt has fallen for four years in a row, halving since 2012 when people owed around £38,200, Prudential found.

New retirement freedoms introduced in April last year give people much greater freedom to cash in their pension pot how they wish. Some retirees may have put some of this cash towards paying down their debts.

Stan Russell, a retirement income expert at Prudential, said: “The average amount owed by retirees has been falling since long before the pension freedoms came into being, so we have to assume that other factors have been encouraging people to pay down their debts before they give up work.”