Aviva Real Retirement Report reveals debt is a growing issue for over-55s

Article date: 9 March 2011

  • One in seven "Baby-Boomers" expects never to be debt-free

Aviva’s fifth Real Retirement Report (Q1 2011) reveals a growing issue of long-term debt among Britain’s over-55s, with many struggling to clear their debts before late  retirement, if at all. Almost a quarter (23%) say they don’t expect to be debt-free until they are at least 75 and one in seven (15%) say they expect never to repay what they owe.

Almost one third of over-55s (30%) have at least one form of unsecured debt that they are unable to clear currently, and one in five (21%) are still making mortgage payments.  

The Aviva quarterly report reviews the finances of the three different ages of retirement – pre-retirees (aged 55-64); retiring (65-74), and long-term retired (75 and over), examining how the finances of these age groups have been affected by the economic landscape of the last year and how this has led them to economise in other areas. The findings are outlined in a separate press release.

Unsecured debt
One third of all over-55s have at least one form of unsecured debt. Of these, credit card debt that is not cleared each month is the most prevalent (30%), followed by personal loans (13%) and overdrafts (10%). The most sizeable debts are personal loans (average amount owed £5,983) followed by credit card debts (average amount owed £3,311).  

Worryingly, the proportion of people with unsecured debt is fairly consistent across the three retirement age groups indicating that those with debts find it incredibly hard to clear them. (See table one below). 

Table one: Amount of unsecured debt owed by over-55s in February 2011

Type of debt

% all over-55s with debt

Average owed by all over 55s with debt

% 55-64s with debt

% 65-74s with debt

% 75+ with debt

Credit cards

30%

£3,311

30%

29%

35%

Personal loans

13%

£5,983

14%

14%

5%

Overdraft

10%

£2,202

11%

9%

8%

Store cards

6%

£1,220

6%

7%

5%

Hire purchase

4%

£1,998

4%

4%

3%

Source: Aviva research 

Secured debt
Among the over-55s, 21% are still making mortgage repayments, and Aviva’s Real Retirement Report reveals that the average amount owed has risen £10,540 in the last 12 months from £54,567 (February 2010) to £65,107 (February 2011).

Reasons for debt accumulation
The Real Retirement Report found the increased cost of living was cited as the main reason behind over-55s’ debts, with 29% saying they’d borrowed to fund an essential purchase, and 18% saying being unemployed or not being able to work as much as they wanted was a contributing factor. Around one in five blamed family obligations, with 5% saying they had borrowed money to help their children financially, and 4% taking on debt to fund a major family event such as university fees or a wedding.

Others admitted their own financial decisions were to blame, with 13% saying they’d overspent on non-essential items such as holidays and 10% saying poor money management was a cause. However, in a warning for those currently planning their finances in retirement, 23% of the long-term retired (over 75) said retirement had cost more than they had expected.

Paying off debt post-retirement
For those over-55s who are in debt, 42% are planning to repay their borrowing “a bit at a time”, with 29% saying they will reduce their outgoings by cutting back on luxuries. Others are looking to take on a part-time job (8%) or sell their property and move to a smaller one (6%). 

Clive Bolton, ‘at retirement’ director at Aviva said: “The fifth Real Retirement Report finds that pressure on retirement income is rising. While there isn’t one single cause for people’s money worries, the combination of economic and social factors over the last year has impacted on many individuals’ plans for their retirement years.

“We know from previous reports that many people are looking to work into retirement – and for people in debt this may be a good solution. However, looking forward, we would urge people to think about their retirement sooner as life expectancy figures indicate more of us will be living longer and we will need to increasingly provide for ourselves.”

-ends-

Download Aviva Real Retirement Report issue five (PDF 719KB)

If you are a journalist and would like further information, please contact:

Aviva Press Office:
Sarah Poulter: 01904 452828 : 07800 691569 : sarah.poulter@aviva.co.uk

The Wriglesworth Consultancy:
Lee Blackwell : Ben Marquand : Emma Beresford : 020 7427 1400 : l.blackwell@wriglesworth.com

Methodology:

This report was designed and produced by Wriglesworth Research. It is a definitive look at the personal finances of the UK’s over-55 population. Not only does it look at personal wealth, income sources and expenditure patterns but also tracks how these change in the "three ages" of retirement.  

Online interviews with over 5,700 UK consumers aged over-55 between February 2010 and February 2011 provided the data for the Aviva Real Retirement Report.

Management information was provided by Aviva, with additional data provided by:

  • Department for Local Government and Communities
  • Office of National Statistics – Inflation Data
  • Halifax – House Price Index

A separate press release from Aviva’s Real Retirement Report which highlights debt issues among the over-55s also can be found at: www.headlinemoney.co.uk/

Notes to editors:

Aviva is one of the world's largest insurance groups* with 53 million customers worldwide and 46,000 employees.

Aviva’s main activities are long-term savings, fund management and general insurance, with worldwide total sales of £45.1 billion and funds under management of £379 billion*.

In the UK, Aviva takes care of its 19.2 million customers by helping them look after their future, protecting what’s important – from their health to their homes, their cars to their business – and saving for the future.

Aviva has a 10.5%** share of the UK life and pensions market and insures one in six homes and one in 10 cars in the UK. It is also one of the oldest UK insurers, with a heritage stretching back more than 300 years.

RAC, which is owned by Aviva, provides breakdown and insurance services for individuals and businesses and has around seven million customers.

Aviva is carbon neutral worldwide, and is ranked in the top 10% of socially responsible companies globally by the Dow Jones Sustainability World Index. In the UK, Aviva invested £3.8 million into local communities in 2009. Read our corporate responsibility report at www.aviva.com/cr.

Aviva’s global Street to School programme is working in partnership with Railway Children in the UK to get children living on the streets back into education and everyday life. Find out more at www.aviva.co.uk/street-to-school.

The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive.

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*based on gross worldwide premiums at 31 December 2009

**Source: ABI data released August 2010

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