People approaching retirement age are taking out more in unsecured loans, according to Aviva, as the rising cost of living continues to put a dampener on debt repayments.
According to the insurer’s latest Real Retirement Report, the level of unsecured borrowing has risen by 4% in the past year amongst the over-55s.
In 2013, the average borrower aged between 55 and 64 now owes an average of £23,188 – a rise of 36% from two years ago.
A quarter of borrowers in this age bracket owe almost three times this amount (£70,000) on their mortgages, while a third owe money on their credit cards.
They are also least likely to save, with almost four in ten unable to save each month. This contrasts with those aged 75 and above, which have nest eggs worth an average of £15,000.
“Pre-retirees are the least optimistic about the prospect of leaving an inheritance,” observed Clive Bolton, managing director of Aviva’s ‘At Retirement’ business.
“Although increasing numbers count on a wage to boost their monthly income, this suggests that careful financial planning will be essential to help them realise this ambition in later life.”
The rising cost of living has taken its toll on those aged 65-74, who have become more dependent on credit cards in the past year. 31% now use credit cards regularly compared to just 27% in May 2012.
A steep increase in food and fuel costs has been identified as one of the main reasons preventing the over-55s from making significant inroads into debts, though the level has fallen a little over the last six months.
"It is encouraging to see incomes rise since December 2012, but the over-55s are under no illusions that the general atmosphere of austerity is here for some time yet," Mr Bolton continued.
"Both short and long-term financial fears have risen significantly since our last report, and with further welfare cuts in the offing, the need to carefully balance finances in later life continues to be a priority."
Keith McDonald
Which4U Editor
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