Pensioners are overspending during the first year of retirement and are therefore being plunged into debt, according to a new report.
Prudential UK highlighted the new phenomenon that has been dubbed the Pensioner Splurge.
The survey found that 26 per cent of pensioners said they spent too much during their first year of retirement and seven per cent said this splurging was by a significant amount.
Around 45 per cent of pensioners find it difficult to adapt to the lower income they receive in the first year of retirement, with 14 per cent saying they found it very hard.
Prudential is worried that the overspend is being funded by debt, with 48 per cent of those polled saying they use a credit card, while a further 17 per cent took out a personal loan. Some seven per cent said they remortgaged their house.
Selling assets, using equity release and borrowing money from friends and relatives also funded these splurges.
"For the average person, when they hit retirement, their income drops overnight. So it's not surprising that many find it difficult to adjust their lifestyle, especially in the first year," said Trevor Mitchell, head of retirement income for Prudential UK.
"The pensioner splurge is a very real phenomenon. If a pensioner spends too much in the first year and does not have enough aside for the rest of their retirement, they could be left short later on." To read more about Loans, click here.
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