Average debts of £38,200 for retirees in 2012

17 February 2012

Almost one in five will retire with average debts of £38,200 during 2012, Prudential's "Class of 2012" study shows.

Most of this debt is accumulated from mortgages and credit cards, with debt repayments expected to cost retirees an average of £260 per month.

The research, tracked by Prudential over the last five years, has started to show trends in pensioner finances - and things are looking rather rocky.

18 per cent of people are now retiring in debt in 2012 as opposed to 20 per cent in 2011. While this is a step in the right direction, the average amount owed has increased by more than £5,000 from last years figures of £33,100 per person.

More than half (51 per cent) are struggling with credit card debts, with half of those with debts owing money on their mortgage.

On top of these figures, Prudential also found that people planning to retire this year will retire making monthly repayments of £260, equating to one fifth (19 per cent) of their expected £1,290 a month.

It could take retirees an average of nearly four years to pay back the debt with eight percent of those who still owe money when they retire in 2012 saying that they will never be able to pay it off. One in four (24 per cent) believe that they will be making repayments of £500 per month.

Men owe more than women

Men who are retiring in debt in 2012 are more likely to owe a lot more than women, with average debts of £45,300, compared with £29,400 for women.

20 per cent of men believe they will have debts when they retire in comparison to 16 per cent of women.

Vince Smith-Hughes, Prudential's retirement income expert, said, "With a manageable repayment programme in place, debts need not become an issue for this year's retirees - and there is plenty of help available through the Money Advice Service and Citizens Advice Bureau."

Welsh are worse off

According to the figures, people in Wales who are planning to retire in 2012 are most likely to have debts (21 per cent of retirees) while those in the East Midlands are the least likely to retire with debts (11 per cent of retirees).

Cash-rich retirement

If you have outstanding debts or mortgage repayments facing you in retirement, why not speak to Key Retirement Solutions today? Key can help you release equity from your home to spend as you wish, with typically no monthly repayments to make.

Using equity release to fund your retirement could see you wipe all your debts away allowing you to live a comfortable and happy retirement. Call Key on 0800 531 6027. Lines are open Monday - Friday 9am - 5.30pm.

Equity release is a big financial step and it is advised you seek independent equity release advice to find out whether it is the right option for you. Through Key you can find out more about the different equity release schemes available, including details of how the value of your estate will be reduced and whether your entitlement to state benefits may be affected.

If you are considering equity release as your next financial move you should read through is it right for you? carefully.