For many pensioners, retirement is proving to be a time of bitterness and bankruptcy. Five times as many pensioners are going bankrupt than a decade ago, as older people face soaring levels of debt, new research has found.
Bankruptcies among over-65s rose by 470 per cent between 2001 and 2011, to 1,972 people a year, Debt Advice Foundation figures show. The size of debts has also increased; an over-55 borrower has 36 per cent more unsecured debt than two years ago, according to the insurer Aviva. The typical retiree with unsecured debt now owes £23,188, up from £22,401 this time last year.
The situation is only expected to get worse, as debt levels for those about to reach retirement age are also on the rise. Older Britons now have fewer savings than they used to, with typical over-55 savings at £11,763, down 25 per cent on last year.
David Rodger, chief executive of the charity Debt Advice Foundation, said: "We have noticed an increase in the numbers of older people calling for advice, many of whom found themselves in desperate straits... The generation that is approaching and entering retirement now is really the first that has had consistent access to credit through their lives." He added: "Many are not planning for the fall in their income, in terms of servicing their debts."
John Train, 68, from Kendal, is still repaying a £25,000 debt he incurred after losing his job unexpectedly in 2009. "I allowed myself to think I could live on the never-never indefinitely," he recalls. "Then I got made redundant and the debts started piling up. Finally I had the bailiffs round. Things were getting worse and worse and I had a nervous breakdown and wasn't able to work for a while.
"I've no doubt I would have killed myself if I hadn't got help... I called Christians Against Poverty and they started helping me. They managed my debts and I just had a letter to say that by January I'll be debt free. It's such a relief." Like many others of his age he must now work for years before he can retire.
Stella Creasy, Labour MP for Walthamstow, said: "It is no surprise that as millions in Britain are struggling to cope with the rising cost of day-to-day living, those over 55 are being forced to eat into their retirement savings or turn to debt just to make ends meet ... It is the unfortunate reality that many find themselves turning to legal loan sharks."
The problem of elderly debt is likely to be exacerbated by interest-only mortgages. Around half of the 2.6 million homeowners with interest-only mortgages due to mature in the next 30 years will not have enough money to repay the full loan amount, the Financial Conduct Authority (FCA) says.
The debt charity StepChange says that 13,148 over-60s contacted them for help last year, up 27 per cent on 2009. The charity says the over-60s owed more than any other group seeking its help and that it was mainly credit-card debt. Such high debt levels increase the risk of homelessness. The number of over-60s approaching StepChange for mortgage help went up by more than 40 per cent between 2009 and 20012.
A spokesman for StepChange said: "Older people seeking our help face a number of problems, including difficulty paying housing costs, arrears on gas and electricity bills and, for some, the cost of dependent children. It's crucial that people approaching retirement who may be struggling financially seek advice and support at the earliest opportunity".