One in three UK savers are expecting to retire with an average debt of £17,460 this year, new research by Key has revealed.

The survey found that of those in debt, 48 per cent still owe money on credit cards, 31 per cent have an outstanding bank loan, and a further 14 per cent still have an outstanding mortgage to consider.

Whilst the average debt was £17,460, the survey also found that 8 per cent of respondents owe over £20,000 at retirement, with a further 4 per cent unsure how much they owe.

Clearing these debts is expected to have a further impact on retirement income as those surveyed anticipate taking three-and-a-half years to clear their debt on average.

However, one in eight respondents believe they’ll keep their debt for nine years, and a third say they will never be able to pay off the money owed.

Commenting on the research, Key CEO, Will Hale, said: “With changes to the state pension due to start coming into effect this year, it is vitally important to understand the challenges and aspirations of the “retirement class of 2020”.

“Today’s findings suggest that while most people work hard to retire debt-free, this is not the reality for one in three people who need to consider how they can service and repay over £17,000 in borrowing from their retirement nest egg.

“Even those with generous incomes may find this a stretch and people are taking an average of three-and-a-half years to clear the debts they retired with – at a time when they should be enjoying an active retirement and worrying less.”

Whilst the average length for retirement planning was two years and four months, the research revealed that 34 per cent of people only start to make definite plans to retire within twelve months of their finish date.

Key also stipulated that those who do take the average two years and four months for planning may still struggle if they owe more than £17,000, urging savers to consider equity release to support their retirement income.

Equity release products recently reached record low interest rates according to analysis by Defaqto, while the Equity Release Council’s 2019 spring report showed that single women over 55 accounted for over a quarter of new equity release agreements made in late 2018, a 50 per cent increase from the previous year.

Hale added: “Equity release is not right for everyone but it is vitally important that people are not prevented from considering how their largest asset, their home, can support them in retirement by misconceptions and unanswered questions concerning later life lending options.

“There is a lot of help available online on how to budget for retirement and working with a financial adviser in the run-up to retirement can make a massive difference in being as retirement ready as possible.”

Share Story: