Retirement savers are struggling to clear debts as they enter the crucial period in the countdown to retirement, Key Retirement found.
Nearly two out of five (38%) of working over-55s struggle to clear their credit card balance every month with one in seven (14%) owing money on their plastic for more than a year.
Key is campaigning to help savers become retirement ready by highlighting the risks of debt for those entering or nearing retirement. It also wants to provide support and practical ideas for those already managing debt in retirement, encouraging them to look at potential solutions for managing or eradicating debt.
Dean Mirfin, chief product officer at Key Retirement said: “People approaching the end of their working lives need to get their financial house in order as they literally cannot afford to be complacent about the risk of debt when they are retired.
“It is obvious but true that the main cause of debt no matter how old you are is an income that is lower than your outgoings and that is an issue that is easier to tackle while you are working and have a higher income.
“That is why it is important to take action before you retire and seeking independent specialist financial advice can help people ensure they are retirement ready and as debt-free as possible before they stop work.
“There are also practical steps that people who are already retired can take to better manage and control their debts. Burying their heads in the sand is not a solution as the worry which follows can prove life-changing.”
There’s a worrying lack of knowledge about how much credit card debts cost them. Some 43% admitted they don’t know the interest rate they pay while more than one in 10 (11%) are paying rates of more than 20%.
Around a third (32%) said they have other debts including personal loans, car finance and overdrafts hampering their ability to maximise retirement saving.
The debts on top of any outstanding mortgage payments are substantial. Around 13% of working over-55s owe £10,000 or more on credit cards and loans with one in 10 making monthly payments of £500-plus.