New research has revealed that the amount of unsecured debt for 55 to 74-year-olds has grown by over a third during the last four years.
According to more 2 life, the rise in unsecured debt levels for this age bracket is more than double the growth of the national average during the same time frame, which stands at 14%.
The company states that the over 55s have an “alarmingly high debt to income ratio”, with the research indicating that the form of debt most commonly used by this age group being credit cards. It showed that each month, 30% spend more on their credit card than they pay off.
Over the past 5 years, the majority of those aged over 55 who have held unsecured debt have opted to use it for a range of different reasons. These include managing personal cash flow challenges (19%), refurbishments or repairs to the home (17%), repayment of other borrowing (17%), financially supporting a family member (10%) or to invest in other assets (5%).
Commenting on the research was CEO at more 2 life, Dave Harris. He said: Our research clearly highlights the growing use of unsecure borrowing amongst older age groups, with debt rising by more than a third in just four years. While these figures might seem relatively modest and manageable while working full-time, it may well stretch the budget of someone in retirement on a fixed income.
“With continuing issues around insufficient retirement savings and an increasing number of people entering retirement with other types of borrowing like mortgages, the problem is only going to get worse. As an industry, we need to do more to ensure customers are fully aware of all the options available to them, including how they can unlock their property wealth to achieve their goals of a stress-free retirement.
“For advisers, these borrowers represent a segment of the market that requires a significant amount of support. Advisers have a vital role to play in determining whether equity release can help their clients, which creates an opportunity for them to expand their offering. As this research reveals, the issue of growing debt levels among retirees cannot be ignored any longer. It is crucial for lenders and advisers to work together to develop an expansive product range and deliver thorough advice that is in the best interest of customers.”
