Research data by Aviva has shown that 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

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.”

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