17% of retirees ‘facing major debt problems’

Some 17 per cent of Britons planning to retire in 2014 will be doing so with outstanding debts. 

Prudential's Class of 2014 study has discovered nearly one-fifth of workers in the UK are not in as financially comfortable positions as they had hoped to be.

While 56 per cent of this group have credit card debts, 44 per cent are dealing with mortgage repayments, which could severely reduce the amount of disposable income they will have month-to-month. 

Typical debt repayments stand at £220, while average arrears have been calculated at £24,800. This situation is far from ideal and underlines just how important it is to have a proactive attitude to clearing debts.

One positive is that over the last 12 months consumers have taken a more diligent approach to managing their arrears, as the typical amount owed has dropped by 21 per cent.

Stan Russell, a retirement expert at Prudential, stated retirement incomes "remain under pressure" and so he thinks it is sensible for those nearing retirement to reduce their debt repayments where possible.  

"Paying off debts as early as possible – and ideally while still working – will help to increase disposable income in the early years of retirement. Debt does not have to be a major issue in retirement as long as people have the income to make repayments and a realistic repayment plan in place."

However, some retirees are set to struggle for many years, as 25 per cent will be forced to part with over £400 a month to service their debts, while 18 per cent expect it to take at least seven years to clear all of their arrears. 

The easiest way to prevent this situation from developing is to take debt management measures at the earliest possible stage. This will allow people to come to an arrangement with creditors and reduce their monthly outgoings as a result. 

By Joe White