One in five will retire in debt

Their research found that the ‘Class of 2015’ are more likely to retire in debt than those who gave up work last year (17%).
 
Prudential’s research has tracked retiree debt since 2011 and shows that despite some small fluctuations, the proportion of those retiring with debts outstanding has remained consistently around the one in five mark. However there is a noticeable trend that retirees’ average amount of debt has reduced over the years.
 
Those retiring with debts in 2015 say they will owe on average £16,400 less than those who retired in 2012 – representing a 43% drop in the last three years.
 
The average ‘Class of 2015’ retiree with debts says that it will be just over three years before they are paid off – this also compares favourably with last year’s retirees who said it would take them four years. Meanwhile, almost one in 10 (9%) of this year’s retirees with debts expect to take nine or more years to clear their debts, and a further 5% believe they will never pay them off.
 
More than two in five (43%) of this year’s retirees with debts have an outstanding mortgage – another figure that has remained high since its peak at 52% in 2011.

On average, a female retiree with debts will owe £24,900 this year – up considerably since last year when the average owed was £20,700. Men retiring this year with debts will owe an average of £19,700, down significantly from last year’s £28,400.
 
While the ‘Class of 2015’ have the highest expected annual retirement income for six years at £17,000 a year, debts remain a major drain on their finances. On average, debt repayments are currently costing them more than £200 a month, rising to over £500 a month for one in seven (14%).
 
Stan Russell, retirement expert at Prudential, said:

“Our new research shows a welcome downward trend in the average amount of debt for people retiring this year. However, it is a concern that the proportion of people reaching the retirement milestone still owing money is refusing to fall.
 
"For many, retirement is a time in life when it is necessary to re-assess household budgets, and any debts outstanding will inevitably make this job more difficult. A consultation with a financial adviser or retirement specialist can help people to get their finances ready for life after work."