The study found that unsecured debt among those aged 55 to 74 has jumped by 34% over the last four years, compared to the national average rate of increase at 14%.
The typical 55-64 year old has unsecured debt worth £4,685, up from £3,452 in 2012. While the typical single pensioner has monthly income of £2,096, that means this age group has a debt to income ratio of 224%.
Dave Harris, chief executive officer at More 2 Life, noted that while these figures seem relatively modest and manageable while working full time, it will stretch the budget of those in retirement on a fixed income.
He continued: “With continuing issues around insufficient retirement savings and an increasing number of people entering retirement with other types of borrowing like mortgages, the problem is only going to get worse.”
David Sheppard, managing director of Perception Finance, said that there is a desire to buy now and pay later, and suggested that part of the increase in the use of credit cards may be that the nation has become more aware of the additional protections offered when purchasing on a credit card.
He continued: “The UK as a whole is more relaxed to debt than many other countries and well managed debt can be beneficial. The key though is making sure that those who are struggling are given the resource to overcome this without being duped into spending even more money to do so.”
The study also found that one in ten people aged 65 to 74 are still paying off a mortgage, owing on average £120,000 – up by 24% from in 2013. What’s more, their mortgage debt is larger than the average 55 to 64 year old who owes £113,000.
David Hollingworth, director at L&C, said that there are lots of people in this age group sat on large amounts of equity so may be choosing to increase their mortgage debt in order to release some of that money to fund their lifestyle or pass the money onto loved ones.
He added: “It’s easy to talk about it as if everyone increasing their mortgage debt is in a distressed state, but there are plenty of borrowers in this age group who are asset rich but cash poor.”