One in five retirees will have debts

People who retire this year are more likely to be in debt than those who retired last year.

Almost one in five people (19%) planning to retire this year will do so with debts outstanding, according to Prudential.

The sums involved aren't small either, with an average debt of £21,800.

The ‘Class of 2015’ are more likely to be in debt when they retire than those who stopped work last year, when 17% retired in the red. Since its research started in 2011, Prudential has noted only slight fluctuations in this figure, which remains more or less at the one in five mark.

The good news is that this year's group of retirees will owe an average of £16,400 less than those who retired in 2012, marking a 43% drop in the past three years.

Those retiring in 2015 have the highest expected annual income for six years at £17,000 a year. However, debt repayments are costing them more than £200 a month on average. And for 14% of them, those repayments jump to a whopping £500 a month.

The average ‘Class of 2015’ retiree with debts said that it would take just over three years to pay them off; last year’s retirees said that it would take four, so there's some progress there. That said, almost one in 10 of this year’s indebted retirees think that it will take nine or more years to clear their debts, while a further 5% believe they’ll never pay them off.

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What debts do they have?

Mortgages remain the dominant debt here, with a whopping 43% of retirees with debt still needing to meet the monthly mortgage payments. Prudential says this figure has remained "stubbornly high" since its peak of 52% in 2011.

Over half of indebted retirees will have credit card debts.

The gender split

Women owe quite a bit more in retirement than they did last year, at £24,900, up from £20,700. Men have gone the other way, with average debts falling from £28,400 to £19,700.

The proportion of women who expect to be in debt when they retire is unchanged at 16%, while with men it has increased to 21% from 19% last year.

Even though this group has the highest expected retirement income at £17,000, debt will still be a major drain on their finances. On average, debt repayments are currently costing them £200 a month, rising to over £500 a month for one in seven.

Do you think you’ll be really stuck when you stop working? Read our guide on What to do if you are retired and still in debt.

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