The Centre for Economics has revealed that unsecured debt among 55 to 74-year-olds has risen by 34 per cent over the past four years. At this rate debt in this age group is growing More than twice as fast than the national average (14 per cent).
Worryingly, almost half of 55 to 64-year-olds have some form of unsecured debt and around one in three admit to spending more on their credit cards every month than they can pay off.
Rather than spending this credit on frivolities, most reported using the money to cover home repairs, repaying other borrowings, or covering day-to-day expenses.
This research tends to go against the perception that older individuals are better-off and that credit spending is a habit of millennials and younger generations. In fact, according to another recent research project, younger people are more likely to be saving than building debt.
It is understandable why some older borrowers may have increased debt in recent years. We have experienced almost a decade of record low-interest rates, which has reduced the cost of borrowing significantly.
For older generations who may have a better credit score and greater assets, such as a home, this has made securing new credit easier.
However, there is a growing concern that many older people may be placing a larger burden on their savings, pension or home as they approach retirement.
Another looming crisis for those in this age group is full interest-only mortgages of which 1.67 million British homeowners are signed up to and may be unable to pay.
Ros Altmann, a leading UK pensions expert and peer, said: “A growing number of older people are facing important decisions about how to manage their income and assets over a longer period than previous generations, as more people enter retirement with secured and unsecured debt.
Some may be doing this as part of a deliberate asset management strategy, but many are doing so to help manage cash flow problems and make ends meet. Low-Interest rates are not a sufficient condition for reducing debt burdens and more is needed to help people manage their unsecured loans.”