Recession increases burden for grandparents in debt

Research from the fifth annual Scottish Widows UK Pensions Report reveals that the debt burden for retirees is getting worse, whilst overall UK debt is going down. Almost one in six (15%) retired people in the UK have an outstanding mortgage - with an average debt of £50,100 - an eight thousand pound increase from 2008.

When it comes to non-mortgage debt (e.g. credit cards, personal loans etc) the situation is no better. The average outstanding non mortgage debt for retired people is £7,344, up from £6,732 in 2008 and £5,930 in 2007, showing a steep increase in non-mortgage debt. This makes the total nationwide debt (including mortgage and non mortgage debt) held by those in retirement £90.41 billion, up from £72.3 billion last year.

Ian Naismith, Head of Pensions Market Development at Scottish Widows, says: "The situation for retirees in debt is not getting any better, and an increase of eight thousand in the average amount of mortgage debt is alarming. The recession has seemingly done nothing to encourage retirees to cut their debt, and with the possibility of the value of their property dwindling, they could be leaving themselves in a vulnerable position. Those in retirement should be able to enjoy life and not worry about the financial burden of debt, as well as their retirement income."

The research also shows that one in fourteen (7%) have the added burden of one or more grown-up dependent children, revealing that dependency doesn't stop at adulthood.

The results also reveal, that when compared to 2008, pre-retirees aren't much closer to owning their own home outright - suggesting that the trend of retirees still being burdened by monthly mortgage repayments is likely to continue. The amount of pre retirees who still have a mortgage remains the same as last year at 43% but the average mortgage debt has gone down slightly from £58,300 to £57,000.

Ian Naismith continues: "The situation doesn't look much better for pre-retirees - at a time when they should be putting all their money aside for retirement they have to concentrate on paying off debt. It is important for these people who will be reaching retirement in the next few years to consider how best to prepare themselves for the eventuality of having to juggle their debts on a reduced income when they stop working."