Recent findings released by Prudential announced that 2013 will see 7% fewer retirees entering their post-employment years without the worry of owing money on mortgages, compared to 2012 levels. This came alongside more positive news that the average amount of debt to be carried into retirement has fallen from £38,200 to £31,200.
At present, 18% of people who will retire this year still have debt in some shape or form. Of these retirees, 43% still owe money on their mortgages, in comparison to 50% in 2012. Similarly, the average amount owed by men has declined from £45,300 in 2012, to £33,800. Women have seen a modest drop in their debt owed from £29,400 to £28,100.
For Vince Smith-Hughes, retirement income expert at Prudential, this is positive news. He comments that ‘debt does not have to be a major issue for people in retirement’, as long as they have sufficient income. However, with the average retirement income being 18% less compared to those who retired in 2008, problems may arise for those with debt.
While on average most retirees expect to be debt-free within four years of retirement, 12% sadly believe they will never be debt free. As such, the advice of Smith-Hughes is to pay ‘off debt as early as possible while still working’ to ensure one has more disposable income in retirement. As a result more pensioners might try to avoid taking on additional debt in their later years, therefore staying away from taking on a pensioner’s mortgage.
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