Debt Management Could Help Borrowers Approaching Retirement

Oct. 21, 2009 - PRLog -- Research from Moneysupermarket.com found that more than half (51%) of Britain's over-50s population hold non-mortgage debt, at an average of £6,734.

Over the past 12 months, 17% of over-50s in debt have reduced their non-mortgage debt, according to the research, but 22% have taken on more debt in this time. 5% said their debt had increased "a lot".

48% of over-50s whose debt had increased said they had gone further into debt in order to pay bills. 15% of those in debt said they believed debt would always be part of their life.

However, 48% of over-50s had reduced their outstanding borrowings over the past year, with 21% claiming to be in a lot less debt than they were a year previously.

Tim Moss, head of loans and debt at moneysupermarket.com, said: "… It's encouraging to see that a good number of Brits aged over 50 are taking active steps to reduce the amount they owe.

"However, the fact that half of the people in this age group are still in debt above and beyond their mortgages is alarming. Those aged over 50 have to factor how long they can continue earning, and begin thinking seriously about their finances in retirement; debts that are currently easy to service could become a millstone round their neck in later retirement years."

A spokesperson for Gregory Pennington said that trying to pay down debt in the run-up to retirement could affect the borrower's ability to save adequately for retirement.

"The over-50s age group are at a crucial stage in terms of financial security. Hopefully, most will have saved a reasonable amount towards their retirement in the form of a pension or something similar, but many over-50s will hope to increase their savings further in order to maximise their retirement income - and of course debt can be a stumbling block in this situation.

"Over-50s in debt are in a difficult situation: any money being paid towards debt is money that would ideally be going towards a pension, but at the same time it's important to pay off that debt as quickly as possible, both to save money in interest and to pave the way for increased savings once the debt has been paid off.

"Providing the borrower is financially comfortable, there's no reason why they shouldn't save and repay debt at the same time, but if the debts are so big that the borrower simply can't afford to save, then they should seek expert debt advice as soon as possible.

"A debt adviser can offer help and guidance on a range of debt solutions that can help the borrower to clear their debts and enable them to start saving again."