Changing demographic and lifestyle factors have led to an increase in the number of people in the UK approaching retirement age with outstanding mortgage or unsecured debt.
In the past five years alone, the total value of debt held by the over-55s is estimated to have increased by 47 per cent and in another five years, this total value is forecasted to increase by 35 per cent, rising to £397bn by 2024.
The figures, from more 2 life's recent '2019 Later Life Lending Report: Retirement Debt', show a similar trend is emerging for the over-65s, with the total value of debt held amounting to £91bn in 2019, compared to £86bn in 2018.
Further projections suggest these levels will increase by 117 per cent in 2029, reaching a total of £199bn within the next decade.
In total, over-55s will owe £548bn by 2029. Based on figures from the Office for National Statistics, this means that of those aged 65 and over currently in the UK, each will be £16,500 in debt within 10 years.
This shift in the age pattern of people with debt is a worrying trend and has far-reaching economic and societal consequences, many of which are still poorly understood.
While a growing number of older people are carrying secured and unsecured debt into their retirement as part of a deliberate asset management strategy, more are doing so to simply make ends meet.
Debt drivers
There are a number of factors behind the growing number of people entering retirement age with increased levels of outstanding debt.
The first is a result of the property market; house prices have significantly increased over the past 15 years, which has led to an increase in the amount of debt many people take on when buying a house.
This, coupled with the fact that many first-time buyers are getting on the property ladder later in life, means that not only are mortgage values higher, but borrowers are spreading repayments over a longer period of time, which is ultimately resulting in the debt being carried beyond the traditional retirement age.
Another factor is that the number of people who own more than one home has also increased, with figures published by the Resolution Foundation in 2017 showing one in 10 British adults own a second property.
This increased by 1.6m to 5.2m between 2000 and 2014, an overall increase of 30 per cent.
However, it is not just mortgage debt that is rising among those aged 55-years-old and over, the level of unsecured credit debt is also increasing.
The research found that credit card debt is the most common form of non-mortgage debt among the over-55s, with over one in five (22 per cent) holding credit card debt, followed by car finance debt (9 per cent), personal loans (7 per cent) and an overdraft (7 per cent).
