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Pensioner debt burden increases

28 August 2009 / by Andy Davies

Pensioners face a combined nationwide debt of £90billion this year, an increase from £72billion the year before, research from the Scottish Widows UK Pensions Report has found.

The study found that one in six retired homeowners is facing an average mortgage debt of around £50,000. This represents an estimated £8,000 increase on last year as around 1.35million pensioners still have a mortgage to pay.

In addition, the average non-mortgage debt for pensioners has risen to £7,334 which is about a £600 increase on last year's figures.

Ian Naismith, head of pensions market development at Scottish Widows, is concerned by these figures, he said: "The situation for retirees in debt is not getting any better, and an increase of eight thousand in the average amount of mortgage debt is alarming.

"The recession has seemingly done nothing to encourage retirees to cut their debt, and with the possibility of the value of their property dwindling, they could be leaving themselves in a vulnerable position.

"Those in retirement should be able to enjoy life and not worry about the financial burden of debt, as well as their retirement income."

The research shows that seven per cent of retirees have to support one or more grown up children.

In addition, according to Scottish Widows the outlook is not much better for people approaching retirement as 43 per cent of people have a mortgage debt of £57,000.

Commenting on this figure, Mr Naismith added: "The situation doesn't look much better for pre-retirees - at a time when they should be putting all their money aside for retirement they have to concentrate on paying off debt.  

"It is important for these people who will be reaching retirement in the next few years to consider how best to prepare themselves for the eventuality of having to juggle their debts on a reduced income when they stop working."

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