This is according to new research from independent equity release adviser Key Retirement Solutions.
And the average doesn’t tell the whole story – maximum credit card debts are as high as £90,000 with some pensioners clearing £250,000 unsecured loans and others struggling with £340,000 mortgages.
Key Retirement Solutions believes the credit crunch has driven pensioners to turn to credit cards to fund living costs when they’ve been unable to borrow in other ways and warns that the aftershock of the endowment mis-selling issue is another major factor.
Its analysis of more than 4,400 customers in 2010 shows one in three had debts run up from credit cards, loans or mortgages with many struggling with multiple debts.
Figures for the first quarter of 2011 show 31% of customers used some or all of the cash they raised from equity release to clear their debts compared with 23% for the last three months of 2010.
The debt burden takes a major bite out of pensioner household income – in 2010 pensioners with debts were putting £385 a month towards repayments. On an average pensioner household income of £17,727 before tax that amounts to 26% of income going on debt repayments.
But again averages don’t tell the whole story – some over-65s were paying as much as £2,099 a month on mortgages with others making £1,200 a month repayments on loans and £2,000 a month on credit cards.
The average owed on a mortgage is £30,838 while average credit card debts were £10,296 and average outstanding loans were £11,386, Key Retirement’s data shows.
Dean Mirfin, group director at Key Retirement Solutions, said: “Pensioners in line with the rest of the country have struggled to borrow money in the past three years and have increasingly turned to credit cards to tide them over.
“They are also feeling the effects of the endowment mis-selling scandal as they’re coming to the end of mortgage terms and struggling to pay off mortgages as their endowments have missed payout forecasts.
“It all adds up to a major squeeze on incomes but there is silver lining in that they literally sitting on considerable wealth in their own home. Clearing debt will transform their finances and provide a welcome boost.”
