Almost one-third of retired people were still carrying debt at the point they gave up full time work, according to new figures from Old Mutual Wealth.
Research conducted on their behalf by YouGov amongst 1,649 UK adults found that the average amount of debt held at the point of retirement was £34,500, but 19 per cent had debts of over £50,000 and almost one in ten had debts of over £100,000.
Mortgage debt is most common, with 21 per cent of people still owing money on their house when they retire, while 14 per cent owed money on credit or store cards and 6 per cent had unsecured loans.
The research suggested that the average amount withdrawn in cash from pension funds by retirees since the April ar-retirement reforms is £28,000 - with 19 per cent of retirees using some of that money to pay off debt.
However, 58 per cent of those who had debt at the point of retirement are still in debt now.
The probability of carrying debt into retirement may come as a surprise to those approaching retirement now, as only around 17 per cent of those surveyed expected to owe money when they decide to retire.
Those who do expect to have debt at retirement anticipate the amount to be around £33,500 - but only 9 per cent expect to owe money on their house.
Adrian Walker, retirement planning manager at Old Mutual Wealth, commented that the data shows a harsh reality that many will not be able to release themselves from debt immediately, as levels are higher than they perhaps imagine.
“The new pension rules do give people the option of using some, or all of their pension savings to pay off debt, however the amounts being withdrawn are not enough to cover the average that is owed and there could be a detrimental effect on the amount of longer term income available to these consumers.
“The data shows that debt planning is just as important as saving and investing in relation to how much income people will have in retirement. Putting a plan together that includes how debt will be managed in the run up to retirement can be best managed with the help of financial advice ”
peter.walker@ft.com
