3 in 10 older people in debt are struggling to repay

Three in 10 (28%) of the 1.1 million older people in debt are considered to be in 'problem debt' and are struggling to repay, according to new research published today by the International Longevity Centre - UK (ILC-UK) and Age UK.

The findings, using data covering 2002-2010, reveal that around 6% of over-50s in England faced debt problems in 2010 while around a quarter of the older population were using unsecured credit.

And while the overall numbers of people with problem debt remained virtually unchanged between 2002 and 2010, among those with unsecured debt, 28% were considered to be in problem debt in 2010 - a rise from 23% in 2002.

Among the over-50s population, the older people are the less likely they are to have debts; even so, of those aged 70 and over with unsecured debts, 1 in 6 are struggling with problem debt.

The latest figures also show that 10 per cent of older people with unsecured debt - around 400,000 - are paying over £85 a week to service their debt.

How debt affects people in later life

It's widely acknowledged that debt problems seriously impact on people's quality of life and relationships, but for the first time, this research shows that older people who enter problem debt are over twice as likely to experience marital breakdown as those who do not.

The ILC-UK and Age UK are warning that the increased financial pressures older people have faced over the last decade, such as rising prices for energy, are likely to have contributed to the increasing amounts of debt owed among the over 50s.

Significant levels of debt for people in or approaching retirement can cause particular hardship as the options to repay debt at this stage in life are often more limited or non-existent.

A problem for self-employed older people

Published today, the new report,  Tales of the Tallyman: Debt and problem debt among older people (PDF, 468kb), highlights those most at risk from debt.

The figures show that in 2010, self-employed older people were twice as likely as retired people to be in problem debt, with unemployed older people 3 times as likely to be in problem debt. This is particularly worrying considering that growing numbers of older people are becoming self-employed, with those 50 plus making up 84% of the increase in self-employed workers since 2008.

Having a mortgage was also a key risk factor, with owner-occupiers with a mortgage 5 times more likely to be in problem debt as owner-occupiers without a mortgage.

Volume of individual debt on the rise

The research shows that while the numbers of those aged 50 and over using credit dropped by 10% between 2002 and 2010, the amount those with unsecured debt owe increased substantially, rising from £1,500 in 2002 to £2,500 in 2010 on average - an increase of two-thirds in cash terms. Among these debtors, 10% had debts of £15,000 or more.

This research supports anecdotal evidence from Age UK advisors who report that they are seeing more cases of older people experiencing debt problems.

Commenting on the findings, Michelle Mitchell, Charity Director General of Age UK said: 'There is a small group of older people who are facing the nightmare of increasingly serious debt problems which doubles their chance of their marriage breaking down and can ruin their quality of life.

'While it is good news that overall debt among the older population is falling, this research, supported by evidence from other charities, sends a clear warning that funding for debt and money advice for older people must be protected and expanded.

'Debt advisors need to understand the specific needs of older people often living on low fixed incomes and particular attention must be paid to those moving into self-employment or who have recently become unemployed.'

The importance of debt advice services

These findings follow a recent report by StepChange Debt Charity, which showed that although older people make up a small proportion of their client base, people aged 60 and over seeking their help had, on average, higher debts than any other age group.

This is despite the fact that older people still have more negative attitudes towards using credit and are less likely to have debts than younger age groups.

Baroness Sally Greengross, Chief Executive of ILC-UK, emphasised that: 'Without further intervention, problem debt will continue to blight the lives of older people - impacting on their relationships, quality of life and mental health. This is why it is so important that government makes a commitment to protect funding for debt advice services, and that these services are targeted towards those that need help the most.'

Free advice on debt

If you are an older person who is worried about debt or managing your money, why not read one of Age UK's free guides?

 Download our Dealing with debt factsheet (PDF, 678kb)

>>Visit our Money matters web pages

Alternatively, you can call our free Advice Line on 0845 65 65 65. The Advice Line provides advice over-the-phone or can signpost you to a local organisation.

You can also call your local Age UK to speak to an advisor.