Utilising data from the Office of National Statistics (ONS), SHW has found that the number of people aged over 65 in financial debt increased 7.7 percent over the last two years to 1.65 million, up from 1.53 million. In comparison, the number of people aged 45-54 in financial debt increased 0.4 percent to 3.99 million and the number aged 45-44 increased 1.5 percent to 4.2 million over the same period.
Child Benefit can protect state pension – why you need to ‘act fast’ State pension 2020: When can I collect my state pension?
How many years contributions do I need for a full state pension?
According to their analysis, SHW details that the increase in the number of pensioners in debt may have been driven by rising life expectancies, which means pension savings are having to stretch further. This has resulted in more people taking out short term loans to cover expenditure.
The property crisis facing millennials may also factor into pensioners woes. With their grandchildren struggling to put together a deposit for a home, grandparents may feel pressured to help out their families, lending funds from their pensions to do so.
These pension debt issues are likely to get worse with predicted longer life expectancies. According to ONS National Population Projections, the number of people aged 80 and over is expected to grow 56 percent to 5.2 million by 2039. This could result in pensions needing to sustain some future retirees for two or possibly three decades.
READ MORE: State pension: How you could increase how much you get in 2020
Debt levels are rising for pensioners and the elderly (Image: GETTY)
Debt levels have been rising for a number of age groups according to analysis from SHW (Image: EXPRESS & Salisbury House Wealth)
As Tim Holmes, Managing Director at SHW, details: “Longer life expectancies means more and more over 65s are struggling to stay afloat.” SHW adds that as pensions are stretched further, it is crucial that individuals start saving as early as possible in order to build a good cash buffer for retirement. This would reduce the likelihood that individuals will need to take out debt.
These tips should be noted by younger generations too. SHW explains that the growing number of pensioners in debt may have also been driven by more individuals taking out debt whilst working and then not paying it back by retirement.
Red flags for this may already be noticeable, with the number of individuals aged 55-64 in debt increasing by 3.7 percent to 2.37 million, up from 2.29 million, in the last two years.
Martin Lewis: 1.3 million are missing out on one of the ‘worst claimed benefits out there’ [EXPERT]
National Insurance contributions: What happens after you reach state pension age? [INSIGHT]
State pension: Britons urged to plan ahead – will you face £24,000 income gap each year? [WARNING]
State pension boost: How to increase your pension by 5.8 percent Martin Lewis reveals discounts worth £1,000s which 1.3m could unlock
Tim Holmes expands on this: “Although taking on debt in retirement is not necessarily a problem, it is best to avoid it given repayments can be harder when you are not earning a regular income.
“Careful financial planning can also help reduce the need to take on debt in the lead up to retirement.
“It can be difficult to adopt the long-term outlook required when saving but the question that needs to be asked is whether you want to just survive retirement or actually enjoy it.”
While the data details that pensioners falling into debt is increasing at the highest rates, other age groups aren’t far behind.
Debt levels may be affected by living standards in retirement (Image: EXPRESS)
State pension age ‘acts as artificial hard line’ – new report
The age group with the second fastest growing number of people in debt is 25-34, which saw an increase of 7.6 percent in the last two years.
Rising debts is a clear issue and the government offers help in this area. For the elderly, the government details that those approaching retirement should think carefully about taking money from pension pots to pay off debt.
They detail that there are arrangements that can be made to pay off debts, which include annuities or Flexi-access drawdown funds.
There are also several publicly available organisations that can help with debt, including Citizens Advice and the Money Advice Service.
Debt issues could arise from supporting family members (Image: GETTY)
Debt relief can also be managed by the severity and type of debt. The government details a number of options available, starting with a Debt Management Plan (DMP).
This method allows repayments of debts at affordable rates, which will be suitable for non-priority debts like credit cards or overdrafts.
A Debt Relief Order (DRO) is aimed for those on very low incomes with few assets, this method allows debts to be frozen for a year.
There is also Individual Voluntary Arrangements (IVA) which are legally binding agreements for debt repayments. In certain cases, Bankruptcy may also be an option.