UK: Aviva data shows credit card debt among over-55s reaches a six-year high.

11 Oct 2017

  • Credit card debt rises 9% in the last year while overdrafts increase by 17%
  • A third (31%) of workers aged 55+ are yet to become mortgage free – compared to 8% of their retired counterparts
  • Over-55s who are still working owe nearly double the amount of those who are retired
  • Over half (54%) of all over-55s are worried about the rising cost of living – up from 45% a year ago

Credit card debt among the over-55s 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. 

The findings come from its latest Real Retirement Report series, which suggests that both secured and unsecured debts are weighing down on over-55s – in particular those who are still working.

Credit card debt is considerably higher among those still in employment, with over-55 workers owing 76% more (£1,296) than their retired counterparts (£737).

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. While the average amount owed on overdrafts is relatively small (£91), it has increased by 17% in the last year (from £78 in Q2 2016), and is at its highest point since winter 2015 (£137).

When all sources of debt are taken into account (excluding mortgages), over-55s who are still working owe almost twice as much (£2490) as their retired counterparts (£1314). This suggests that servicing and clearing this debt may be a factor in more of this age group continuing to work into later life.

Table 1: Average amount of personal debt owed by over-55s working vs. not working

 

Working

Retired

Average credit card debt

£1,296

£737

Average overdraft debt 

£137

£24

Average personal loans

£569

£421

Average debt from other sources (including hire purchase and loans from friends and family)

£488

£131

Total

£2,490

£1,314

A third of working over-55s yet to become mortgage free

Aviva’s data also shows that for many over-55s, the reality of owning their home outright is yet to be achieved. Almost a third (31%) of working homeowners aged 55+ are still paying off a mortgage compared to 8% of retired over-55 homeowners.  

The average amount spent on housing by over-55 mortgage holders has decreased from £315 per month in 2016 to £295 in 2017, which is likely to be influenced by low interest rates. However, their average mortgage debt is now £68,612, up 14% since last year (£60,106 – Q2 2016). This could be linked to an increase in people carrying interest-only mortgage debt into retirement where the original loan has not been paid down during their working lives.

Indeed, the rising cost of living is perceived to be the greatest threat to their standard of living with over half (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 (54% vs. 55%).

Lindsey Rix, Managing Director, Savings and Retirement at 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.

“With widespread speculation that interest rates may rise for the first time in over a decade, 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.”

ENDS

Media Enquiries:

Fiona Whytock | 01904 452 659 | Fiona.Whytock@aviva.com

Aviva’s spokesperson, Alistair McQueen, is available for comment/broadcast interview

Methodology

1 ONS population estimates, mid 2016. There are 19,414,900 over-55s in the UK.

The Real Retirement Report is designed and produced by Aviva in consultation with ICM Research and Instinctif Partners. The Real Retirement tracking series has been running since 2010 and totals 29,568 interviews among the population over the age of 55 years, including 1,177 in July 2017 for the latest wave of tracking data (Q2 2017). This edition examines data from 3,327 UK adults aged 50 and over, of whom 1,829 are still working. 

Technical notes:

  • A median is described as the numeric value separating the upper half of a sample, a population, or a probability distribution, from the lower half. Thus for this report, the median is the person who is the utter middle of a sample. All medians are referred to as typical.
  • A mean is a single value that is derived by adding all the values on a list together and then dividing by the number of items on said list. This can be skewed by particularly high or low values. All means are referred to as average.

Notes to editors:

  • Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.
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