by Mark Johnston
Many over 55s have a substantial amount of debt. Figures show that large amounts of people approaching retirement are falling to save anything to help support them when they finally do leave work.
Reports paint a picture of a divided Britain with a growing gap between the ‘super’ rich and the very poor. More than 1 in 5 people are struggling and an increasing number are entering retirement ‘saddled’ with debt.
Tom McPhail, head of pension’s research at financial advisers Hargreaves Lansdown suggest “we should encourage as many people as possible to save for retirement. The fact that 39 per cent of 55 to 64 year olds are not saving at all shows that the current system is not working”.
The average monthly income for households in the 55 year old age group is approximately £1,284; this is 31 per cent less than the average monthly income of people in younger aged groups, which is £1,623.
The consumer credit counselling service (CCCS) found that home owners over 55 who contacted them in the last year owed an average of £29,772 on credit cards, personal loans and unsecured debts.
More than a quarter of 55 to 64 year olds still also have a mortgage with an average debt of £52,535 and 1 in 5 still owe more than £75,000 on their homes, recent figures show.
Although it would seem that many over 50s are struggling financially most people in this age group are still willing to help out their family, 31 per cent help their children or grandchildren financially.
The ‘baby boomers’ group are far more comfortable it seems with debt than previous generations according to Clive Bolton of Aviva, therefore an increasing number of people are entering in to retirement with secured and unsecured borrowing.
A report undertaken by Saga shows that the over 50s are however cutting back on non-essential spending. A massive 68 per cent are tightening the purse strings in this way. Worryingly though at least 21 per cent are even cutting back on essential items.
The high cost of living is continuing to bite, with high inflation, rising fuel cost and soaring utility bills, downsizing is becoming a real option for many people in their 50s and 60s. Figures show that at least 1 in 5 over 50s is considering this.
Whilst downsizing may be a feasible option for some, many do not want to sell their family home and move away from their family and friends. Another option in this case would be for them to release equity; this allows people to release a tax free cash lump sum whilst remaining in their own home.
Figures have shown that many over 50s are sitting on approximately £1.9 trillion worth of equity.
However a review of 25 local authorities with a high density of over 50s showed that in almost 32 per cent of cases people would be worse off and unable to release enough equity to make it worth while when all costs are taken in to account.
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