New research fromretirement income specialist Primetime Retirement shows over-55s are increasingly turning to payday loans which can charge APRs as high as 4,214% to tide them over as the ongoing squeeze on retirement incomes from low annuity rates, stagnant interest rates and high inflation hits pensioner income.
And they are turning to short-term loans despite making efforts to economise – Primetime Retirement’s research shows more than a third (36%) of those aged 55 and over are currently rationing aspects of their lifestyle.
The top four areas to be rationed were going out (65%), holidays (62%), buying clothes (61%) and travel (58%).
Average income for those aged 55 to 64 is around £318 a week after housing costs and tax – the equivalent of £16,532 a year. But that drops 24% for people aged 65-plus compared to those aged 55 to 64, Primetime Retirement said.
Primetime Retirement said the research highlights the income precipice facing many people in retirement - and the need for increased flexibility and innovation in retirement income solutions to help avoid debt problems.
Primetime Retirement marketing director Stuart Wilson said: “Payday loans are being increasingly used by people across the UK and the 55-plus age group are not immune. It is worrying that people who are close to giving up work still have to rely on debt to fund their lifestyles particularly when they will soon not have a payday.
“Very few people who are working would be able to comfortably absorb a 24% income cut even if big bills such as mortgage repayments have gone but that is the unfortunate reality for many in retirement. Rationing is inevitable given the current economic volatility but keeping your options open and retaining some flexibility in retirement is the best way to retain some control.”
