Worrying increase on last year’s figure
The over-65s in the UK are expected to owe around £86 billion by the end of 2018, according to latest figures from the Centre for Economics and Business Research (CEBR) and More 2 Life. Total debt had increased on last year’s figure of £78 billion, as borrowing grew £35 billion in just three years. The research forecast that all types of secured and unsecured debt to retirees would exceed £142 billion by 2027.
When conducting the research, CEBR took borrowing including mortgages, credit cards, overdrafts, loans, car finance, hire purchase, student loans, payday loans and store cards into consideration.
Researchers have suggested that this increased level of debt is down to a number of factors, including this generation’s use of interest-only mortgages, current borrowing trends and relatively modest pension savings.
University of Birmingham’s college of social sciences Louise Overton said: ‘Worryingly, this report indicates that a significant minority are carrying secured and unsecured debt to help manage cash flow problems and make ends meet.’
Dave Harris, chief executive officer at More 2 Life, said the rapid increase in the retirement lending market ‘will only be exacerbated by an ageing population, people buying houses at a much later stage, and shrinking pension pots resulting in low retirement incomes.’
He added: ‘For growing numbers of people aged 65 and over, financial products that draw on the resource of housing wealth may well turn out to be the optimal way for them to solve the financial challenges they and their families have to face in future.’