Unsecured debt amongst 55 to 74-year olds has risen over a third (34%) over the last four years – more than twice as fast as the national average (14%), more 2 life has found.
While 34% of over 55s have some form of unsecured debt, it is the younger cohort (55 to 64) who are most likely to have this type of borrowing (48%) according to analysis by the Centre for Economics and Business Research (Cebr).
Dave Harris, chief executive at more 2 life, said: “Our research clearly highlights the growing use of unsecure borrowing amongst older age groups, with debt rising by more than a third in just four years.
“While these figures might seem relatively modest and manageable while working full-time, it may well stretch the budget of someone in retirement on a fixed income.
“With continuing issues around insufficient retirement savings and an increasing number of people entering retirement with other types of borrowing like mortgages, the problem is only going to get worse.”
As people age the proportion of those with unsecured debt falls, by 30% for 65 to 74-year olds (30%) and 15% for 75 to 84-year olds.
While this may highlight a trend to repaying debt around retirement, it could also show the difficulties that older age groups face when looking to use unsecured borrowing.
With over-55s who have retired or reduced their working hours typically managing on a more fixed income, this age group has alarmingly high debt to income ratios.
Credit cards are the form of debt used most often by the over-55s with 30% spending more on credit cards than they pay off each month.
For over-55s who have held unsecured debt in the last five years, some have chosen to use it to gain loyalty points such as air miles (5%) or invest in other assets (5%) but the vast majority have used it for necessities.
Almost one in five (17%) have used unsecured borrowing for home refurbishments or repairs, 17% to repay other borrowing, 22% for a large purchase and 17% to cover day to day expenses.
In addition, 10% used unsecure borrowing to financially support a family member and 19% said they used this source of funds to manage personal cash flow problems.
Harris added: “As an industry, we need to do more to ensure customers are fully aware of all the options available to them, including how they can unlock their property wealth to achieve their goals of a stress-free retirement.
“For advisers, these borrowers represent a segment of the market that requires a significant amount of support.
“Advisers have a vital role to play in determining whether equity release can help their clients, which creates an opportunity for them to expand their offering.
“As this research reveals, the issue of growing debt levels among retirees cannot be ignored any longer. It is crucial for lenders and advisers to work together to develop an expansive product range and deliver thorough advice that is in the best interest of customers.”