Shock bills are 'driving retirement card debt'
25 April 2018
One in five over-65s are struggling to clear debts run up from unexpected bills
Half of over-65s only keep their credit cards to help with one-off major bills
Key Retirement’s Managing Debt In Retirement guide can help to beat debt problems
Unexpected bills are a major driver of credit card debt in retirement with nearly one in five over-65s struggling to pay off balances following shock bills, new research* from leading over-55s financial specialist Key Retirement shows.
The research found 18% of over-65s are paying off credit card debt they ran up because of unexpected bills and the average balance is around £3,500. This is 286% more than the average single pensioners monthly income (£906) and 80% more than a pensioner couples average monthly income (£1,937) which suggests that they are likely to struggle to repay this amount.
Over-65s in the West Midlands are struggling with the highest average balances at £4,700 while pensioners in the North East and North West have run up debts of £3,900.
| Region | Average Month Pensioner Income – couple | Average Month Pensioner Income - Single | Av. Credit Card balance due to Unexpected Expenses |
| North East | £1,833 | £875 | £3,900 |
| North West | £1,881 | £880 | £3,900 |
| Yorkshire and the Humber | £1,855 | £867 | £1,800 |
| East Midlands | £1,902 | £871 | £1,250 |
| West Midlands | £1,859 | £880 | £4,700 |
| East of England | £2,084 | £936 | £1,720 |
| London | £1,837 | £875 | £1,800 |
| South East | £2,175 | £992 | £1,400 |
| South West | £1,985 | £936 | £550 |
| Wales | £1,712 | £875 | £2,700 |
| Scotland | £1,937 | £953 | £1,100 |
| UK | £1,937 | £906 | £3,500 |
The risk of unexpected major bills in retirement is high with around 38% saying they have had to use cards to pay surprise bills. And while more than half (54%) have been able to pay the balance off from savings or retirement income, the rest are still struggling.
Around half (49%) say car repairs were the reason for having to rely on plastic while 39% said they had to rely on credit to fund house repairs while 19% used their credit cards to help out children with their financial emergencies.
Debt in retirement is a growing issue but Key’s research shows it is not driven by overspending and reliance on plastic – 50% of those questioned say they only keep credit cards in case they face one-off bills while 40% say they use cards only to fund occasional one-off purchases.
Levels of secured and unsecured debt***held by over-65s is rising and has increased from £70 billion to an estimated £85 billion in the past two years with around £12 billion attributable to unsecured debts such as credit cards and loans.
Key has launched a guide Managing Debt In Retirement with independent financial expert Alvin Hall outlining how to manage and clear debt both before and during retirement.
Dean Mirfin, Chief Product Officer at Key Retirement said: “It is astonishingly easy to sleepwalk into debt and it should be a case of expecting the unexpected in retirement as clearly many are facing shock bills.
“It is not possible to plan for everything and sometimes an unexpected bill will mean having to rely on credit cards to fund it. The problem then compounds itself if people cannot clear the balance and get caught by another surprise bill.
“Unfortunately, it all adds up which means a serious financial burden in retirement. People need to get help and look at all their assets which should include their property if they are a homeowner.”
The research shows around 61% of over-65s with debt expect to clear it very shortly while 29% are confident they will be debt-free within five years. However, 6% are unsure if they will ever clear their debts.
Key’s guide aims to help people become retirement ready with clear advice on options for managing and eradicating debt. It also considers some of the pros and cons of boosting income by carrying on working as well as downsizing and releasing property wealth for homeowners.
The independent guide Managing Debt In Retirement is available by calling 0808 2080958 or visiting: https://www.debtinretirement.co.uk
Notes to Editors
* Research conducted by independent researchers Consumer Intelligence among a sample of 3,000 adults aged 55-plus split among three groups, those aged 55 to 65 still in work: retired people aged 65 to 70; and retired people aged 70-plus
** https://www.gov.uk/government/collections/pensioners-incomes-series-statistics--3
**Research conducted by CEBR ‘Debt in Old Age 2018’ - drawing on the Wealth and Asset survey from the Office of National Statistics and primary research survey of more than 2000 over 55s