Retire Debt by kvb10309

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									26 January 2011

               ONE IN FIVE WILL RETIRE IN DEBT THIS YEAR

•   Prudential’s Class of 2011 study shows average owed by those with debts is £33,100
•   More than half of those retiring with debts still owe money on mortgage or credit cards
•   Professional advice the best way to clear borrowing as part of retirement planning

More than one in five people retiring this year will still have debts when they stop work, owing an
average of £33,100 according to new research from Prudential. One in 20 will retire with
outstanding debts of more than £50,000, rising to a staggering 1 in 10 among men over the age
of 65.


The Class of 2011 study surveyed people intending to retire during the forthcoming year. The
results show that 21 per cent will have to continue to pay down debts while reorganising their
finances after finishing work. Another 14 per cent don’t know whether or not they will be debt-free
when they retire.


The major sources of debt in retirement are credit cards and mortgages – 55 per cent of those
retiring with debts in 2011 owe money on credit cards while 52 per cent still have outstanding
amounts on their mortgage.


Men are more likely than women to carry debt into retirement – around 23 per cent of men say
they will still owe money compared with 18 per cent of women. And the average debt owed by
men is substantially higher at £39,500 compared with £25,100 for women.


Vince Smith-Hughes of Prudential said: “These figures show how the Class of 2011, a
previously risk-averse generation of savers took advantage of the consumer credit boom of the
last decade. Total consumer debt in the UK has more than doubled since 2000 and a large
number of people planning to retire this year are now faced with spending a significant part of
their retirement income meeting these debt repayments.




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"Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is
also used by other companies within the Prudential Group, which between them provide a range of financial products including life
assurance, pensions, savings and investment products. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered
number 15454. Authorised and regulated by the Financial Services Authority.
“While we’d all like to be debt-free at retirement, clearly this isn’t possible for everyone. It is
important not to panic when faced with a reduced income and the need to pay off debts. There is
plenty of help available when planning your retirement finances and a financial adviser is a good
first port of call.”


Gemma Goodman, Head of Operations at The Annuity Bureau, added: “If people have taken
advice on how to clear their borrowing as part of overall retirement planning then manageable
debt need not be an issue. However in the long-term, debt will be unsustainable as income
inevitably contracts once you retire.


“I would recommend that those approaching retirement should review their pension and other
finances with a retirement specialist at least annually to help avoid any surprises when the time
comes to stop working.”


The Class of 2011 research shows one in five (19 per cent) of those in debt have bank loans that
will run past their intended retirement date while one in seven (14 per cent) have overdrafts. Just
1% of this year’s retirees owe money to loan sharks.


People retiring this year in Wales are most likely to have debts, with 37 per cent saying they will
still owe money. Twenty five per cent of retirees in Scotland and 24 per cent in the West Midlands
will have debts.


Of those planning to retire this year with an outstanding personal debt, retirees in South West still
owe £69,100 each, while the frugal new pensioners of the North East owe a more manageable
£12,700 each.

ENDS

The information contained in Prudential UK's press releases is intended solely for journalists and should
not be used by consumers to make financial decisions. Full consumer product information can be found at
www.pru.co.uk.

Media enquiries
Darragh Leeson               07801 856 011                 darraghuk.leeson@prudential.co.uk
Tony Hannon                  020 7150 2657                 tony.hannon@prudential.co.uk
Ben Davies                   020 7150 3017                 ben.davies@prudential.co.uk

Note to editors

•   Survey conducted by Research Plus between 5 and 10 December 2010 among 10,143 UK non-retired
    adults aged 45+ including 1,005 planning to retire in 2011 using an online methodology.

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"Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is
also used by other companies within the Prudential Group, which between them provide a range of financial products including life
assurance, pensions, savings and investment products. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered
number 15454. Authorised and regulated by the Financial Services Authority.
•   UK personal debt figures provided by Debt Facts and Figures – Compiled December 2010 a report by
    Credit Action, the National Money Education Charity, using the Bank of England’s debt figures.
       Total UK personal debt on 31 December 2000 – approximately £650 billion
       Total UK personal debt on 31 December 2010 – approximately £1450 billion
       http://www.creditaction.org.uk/assets/PDF/statistics/2010/december-2010.pdf

•   The Annuity Bureau is a division of Alexander Forbes Financial Services, a UK financial advisory
    company. www.annuity-bureau.co.uk

•   Regional breakdown: (Of those planning to retire in 2011) Approximately how much personal debt
    do you think you will have at the point you retire?

    Region                                         Those likely to retire in debt
                                           Percentage                       Average amount **
     East Midlands                          11%                                  £32,500
     Eastern                                15%                                  £39,400
     London                                 16%                                  £40,700
     North East                             19%                                  £12,700
     North West                             23%                                  £21,000
     Northern Ireland*                          -                                   -
     Scotland                               25%                                  £25,800
     South East                             20%                                  £31,800
     South West                             19%                                  £69,100
     Wales                                  37%                                  £25,000
     West Midlands                          24%                                  £26,400
     Yorkshire / Humberside                 21%                                  £22,000
*- sample group response too small to include
** - rounded to the nearest £100




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"Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is
also used by other companies within the Prudential Group, which between them provide a range of financial products including life
assurance, pensions, savings and investment products. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered
number 15454. Authorised and regulated by the Financial Services Authority.

								
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