Britain’s older workers are struggling with large amounts of debt, which is equal to the UK’s young adults, according to a recent study. However, while the focus is on the younger generation, the financial difficulties of the over-55s are going unnoticed.
This is perhaps because having debt is largely expected when you’re in your twenties and thirties, and the older generation is often thought to have acquired enough money to be comfortably off.
For many of today’s over 55s, that’s not the case. Apparently, they are racking up debt at the rate of 10 per cent a year, according to research published this week. The study by Neyber shows a worrying trend and their head of employee engagement, Heidi Allen, feels if they are struggling while still in work, getting a pension pot is not going to save them.
Information from the study includes British insurance company, Aviva, reporting levels of overdraft loans up by 17 per cent during the previous twelve months.
Nationwide tells a similar story, with data showing older customers have an average debt of over £4,500 spread over credit cards, personal loans and car finance. At age 70, the debt rises to nearly £32,000. All that, with an average income of only £19,000 to £21,600 for the 55 to 70 age bracket.
One reason for this debt, according to Keith White, director of IVA.com, is that many over 55s have only been paying the minimum amount on their credit cards for many years. This results in never paying off any of the capital owed. He says that some in that age bracket are taking on substantial mortgages too, maybe for the first time, which he feels is an enormous risk.
It seems that still working is a factor in the increasing debt of 55 – 64 year olds. Aviva’s data shows a third borrowing on a regular basis and a fifth only paying the minimum payment requirement.
No wonder then, that one in ten of that age group feel they are not in control of their finances.
Financial pressures for today’s over 55s are very different from those of the previous generation. Several jobs throughout a working life is now normal, so the chance to build up a good final salary pension is limited. Personal issues such as caring for elderly parents or paying for children’s education are also in the mix.
Call Credit Information Group’s managing director of credit and marketing data, Steve McNicholas, warns that with an impending interest rate increase, the older generation will face serious financial problems when they reach retirement, if something isn’t done.
He thinks frequent affordability checks should be carried out by lenders, so they are alerted to any changes that may cause problems, thereby adjusting their customer’s financial plans as necessary, protecting both the customer and the economy.
Jeremy Over, director of Later Life Services at Spectrum IFA, suggests this could be a life lesson in money management, as the sandwich generation struggle with their own financial worries, as well as those of their parents and children.
Recruiters love this COMPLETE set of Accredited Recruitment & HR Training – View Training Brochure