One in four people planning to retire this year say they will still have outstanding debt when they give up work – the highest number for seven years.
Last year it was one in five, and the average amount owed has shot up to £24,300 from £18,800 in 2016, according to research from Prudential.
People expect it will take an average three and a half years to clear debts, although one in five say it will be nearer seven years and worringly some reckon they’ll never be debt free.
Vince Smith-Hughes, retirement income expert at Prudential, said: “The move from work into retirement will see most people having to cope with a drop in income. So having to use precious retirement income to pay off debts could make life tricky for the newly retired.
”With this in mind, it is a worry that we’ve seen a big jump, not only in the proportion of retirees with outstanding debt but also the amount that they owe.”
Take control before it’s too late
It’s essential you try and take control of your finances well before heading into retirement. Try and get debts cleared while you are still working and earning or expensive repayments will eat into your pension income.
Start planning in your fifties, go through all of your finances and switch and move finances onto the best deals.
- Check your energy bill is the cheapest for your usage – if not switch. Here’s our guide on how to switch
- Don’t simply renew insurances each year – compare the market to find the best cover at the best price.
- Think about using a 0% balance transfer card to clear credit card debt, quicker and cheaper – what you pay reduces the balance, instead of lining the pockets of card firms. See our guide on the best balance transfer cards .
- Try and make overpayments on your mortgage – even £50 a month will help to chop the term and save you interest and give you a better chance of getting it cleared.