One in five will retire in debt this year

This is according to new research from Prudential which showed that one in 20 will retire with outstanding debts of more than £50,000, rising to a staggering 1 in 10 among men over the age of 65.

The Class of 2011 study surveyed people intending to retire during the forthcoming year. The results show that 21% will have to continue to pay down debts while reorganising their finances after finishing work. Another 14% don’t know whether or not they will be debt-free when they retire.

The major sources of debt in retirement are credit cards and mortgages – 55% of those retiring with debts in 2011 owe money on credit cards while 52% still have outstanding amounts on their mortgage.

Men are more likely than women to carry debt into retirement – around 23% of men say they will still owe money compared with 18% of women. And the average debt owed by men is substantially higher at £39,500 compared with £25,100 for women.

Commenting, Vince Smith-Hughes of Prudential said: “These figures show how the Class of 2011, a previously risk-averse generation of savers took advantage of the consumer credit boom of the last decade. Total consumer debt in the UK has more than doubled since 2000 and a large number of people planning to retire this year are now faced with spending a significant part of their retirement income meeting these debt repayments.

“While we’d all like to be debt-free at retirement, clearly this isn’t possible for everyone. It is important not to panic when faced with a reduced income and the need to pay off debts. There is plenty of help available when planning your retirement finances and a financial adviser is a good first port of call.”