16 Nov 2017
The reality of owning a home outright is yet to be achieved for many workers aged over 55.A new report from insurer Aviva found almost a third of working homeowners in this age group are still paying off a mortgage compared to 8% of retired over-55 homeowners.
The average mortgage debt of in this age group is now £68,612, up 14% since last year. Aviva said this could be linked to an increase in people carrying interest-only mortgage debt into retirement.
The study also suggests that both secured and unsecured debts are weighing down on over-55s – in particular those still working.
Credit-card debt for this age group has reached a six-year high of £1,052 – up 9% since last year and the highest level since Aviva began collecting the data in 2011.
In addition to credit cards, over-55s are also turning to other forms of unsecured debt – personal loans and overdrafts – as a means of financial support.
When all sources of debt excluding mortgages are taken into account, older people who are still working owe almost twice as much (£2,490) as their retired counterparts (£1,314).
A rising cost of living is perceived to be the greatest threat to this age group's standard of living, with 54% stating this is one their most significant concerns, up from 45% this time last year – with working over-55s and the retired almost equally concerned.
Lindsey Rix, of Aviva, said: "A growing number of Britons are prolonging their working lives, and our findings suggest that the goal of a debt-free retirement may be one factor behind this. The approach to retirement is ideally a time for saving and careful financial planning, but with the rising cost of living, many people are having to resort to borrowing and still have mortgage repayments to factor into their budgets.
“This record level of debt is worrying. An increase in the cost of borrowing will undoubtedly create challenging conditions for people to navigate on the approach to retirement.
“People’s financial needs are changing in later life with many now facing the prospect of paying off a mortgage and other debts well into their retirement. The industry must consider these changing needs and start exploring solutions to help address these issues.”
If you are planning your financial future, Aberdein Considine can offer you the support of some of Scotland's most talented and respected independent financial advisers.
Whether you want to buy a property, secure an income for retirement, pay for your children's education, provide for dependents or pass your estate to your family, we can provide you with a high-quality service which is tailored to your lifestyle.