Financial worries are incredibly stressful at any time of life but dealing with debt in retirement is even more difficult.
At this age, most people have a fixed level of income that is unlikely to increase, so it’s more of a challenge to deal with money problems.
Latest research has revealed that the average pensioner in Britain retires owing thousands of pounds on mortgages, credit cards, loans and overdrafts.
It is estimated that one in five people who stopped work this year, owed an average of £34,000 of debt in retirement.
Mortgage debt is the biggest issue. One in five are reported to owe more than £50,000 and one in 14, more than £100,000.
Those figures make for bleak reading. At MoneyPlus we like to focus on the positive. MoneyPlus isn’t just a name, it’s a mindset. We always look at the Plus side of things.
Life is short. We believe it should be happier, easier, smarter and better. And that’s where we come in. If you take a little time to think carefully and tackle your debt responsibly, there’s light at the end of the tunnel.
The key thing in dealing with debt in retirement is facing up to it as soon as possible. Here are some proactive steps you can take:
Don’t panic – prioritise
Pay the most important debts first, such as mortgage or rent and utilities, so you don’t risk losing your home. Work out which credit cards or loans carry the highest rates of interest and focus on reducing them first. A debt management plan could help you feel more in control of your debt in retirement.
Consolidate your debts
Managing multiple credit card debts or loans will be less stressful if you can consolidate these into one single debt with a single creditor and an agreed debt action plan. At MoneyPlus we have a team of experts who can talk you through the options.
Be savvy with your savings
If you have a rainy-day fund, now could be the time to use it to reduce your retirement debt. Although this might not be an easy thing to consider, using your savings will mean you’re paying less interest on loans and credit cards.
Downsizing to a smaller, less expensive home is often a great way to free-up a substantial sum of money, clear your debt in retirement and live a stress-free life on the proceeds.
If you’re concerned about the possibility of your children inheriting your mortgage debt in retirement, then equity release can be a simple way of freeing up a lump-sum from the value of your home, while still being able to enjoy living in it. Make sure you take professional advice before going down this route.
When drawing up your list of incomings and outgoings, make sure you’re getting everything you’re entitled to. There are many benefits to getting older that you may not be aware of such as Council Tax support, Pension Credit,
Attendance Allowance and, of course, free local travel. Every little helps to tackle debt in retirement.
At MoneyPlus, we’ve brought together a world-class team of problem-solvers and industry experts who like nothing better than a challenge. So, if you’re thinking of using your retirement as a perfect time to pay off debt, we can help you find the solution.
MoneyPlus – helping you live better at every stage in life.