According to Key Retirement Solutions, around 55% of all people entering retirement have outstanding debts totaling £183 billion for the UK. They suggest that the vast majority of debt is related to a pensioner’s outstanding mortgage that accounts for around £140 billion of the total debt. One in three individuals are faced with the prospect of retiring with an outstanding average balance of £43,000 on their mortgage.  

However, increasingly, more debt is being accumulated in other areas, which is a cause of concern. The report identifies that personal loan debt accounts for £22 billion, while credit cards and overdrafts total £19 billion.

Perhaps the most worrying finding is the fact that the older a pensioner gets the greater amount of debt they accumulate. For example, pensioners over 70 have a debt burden of around £48k while those between 65 and 69 have debts of around £34k. This suggests that pensioners find it difficult to get themselves out of debt once they retire and their income stream begins to shrink.

One saving grace is the fact that although the average outstanding mortgage balance for pensioners stands at £43k, this is far lower than the UK average, currently at £104k. This suggests that pensioners have built up far more equity in their homes than anyone else in the UK, which is typical of this demographic. One option available to them to reduce the amount of outstanding debt is equity release. Based on the average house price of £150k in the UK, if a pensioner with average debt opted for equity release, they should be in a position to clear their debts.

However, individual circumstances must be considered and it is always advisable to seek professional advice to ensure the product fits in with your needs.