And making repayments on the debts takes an average £297 a month bite out of pensioner income – on the average retired household income of £12,412 a year after tax that equates to nearly 30% of income going on debt repayments.
The total mounts up from mortgages, loans, credit cards and overdrafts. The research, based on 3,501 customers who released equity from their homes during 2009, reveals the debt burden being faced by some of today’s retirees. The results also show that the over 70s carry a greater level of debt than the over 65s with an average debt of £40,958 compared to £29,314.
Mortgages make up the biggest slice of the debt with 27% of pensioners still owing money on their homes. This in part is a reflection of the fact that an increasing number of today’s pensioners are living with a mortgage into retirement following an endowment or other investment shortfall. This situation is predicted to worsen as many endowments are due to mature with considerable shortfalls in the coming years.
The average still owed by the over 65s on mortgages is £35,441 rising to £52,576 for the over-70s while the average credit card debt is £8,881 rising to £9,048 for the over-70s.
Commenting, Dean Mirfin, KRS group director, said: “Property wealth has enabled the over-65s in common with the rest of the population to comfortably afford to borrow.
“Servicing debt cannot continue to be a way of life once you no longer have an income to enable you to comfortably make repayments and clearly many pensioners will struggle to juggle loans, credit cards, overdrafts and mortgages.
“The over-65s are in many cases literally sitting on considerable wealth in the shape of their home and clearing debt can have a dramatic effect on their monthly outgoings and provide a welcome boost to their income.
“The level of mortgage debt being carried into retirement is very worrying and with no expected change in this trend pensioners no doubt will further need to look at solutions like equity release to provide the retirement they had hoped for.”