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grey shark

More People Retiring In Debt

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More people retiring in debt

Press Assoc. - Wednesday, March 26 01:10 am

More people are reaching state retirement age in debt - and borrowers approaching it owe four times more than their counterparts a decade ago, a study said.

The survey, by Help the Aged and Barclays, found that a quarter of people approaching retirement age have outstanding consumer credit commitments.

It said there had been "considerable growth" in sums of money borrowed by credit users, including older people.

Credit users aged in their late 50s and early 60s owed on average £3,000 and £2,000 respectively in 2005 - at least four times the amount owed by their counterparts in 1995. UK consumers owe more than £1 trillion in secured and unsecured borrowing.

Those with the highest incomes were most likely to be using credit - but a quarter of over-50s living in the poorest 40% of households in Britain had outstanding credit commitments.

Across all ages, between 1995 and 2005 the average amount of outstanding debt for those with any credit rose three times. The fastest growth was for those aged 55 to 59 and 60 to 64.

Help the Aged voiced concerns about the impact on pensioner poverty and said the Government's financial education plans should meet older people's needs. It said new retirees face the "double whammy" of living on a fixed income while managing existing credit commitments.

Help the Aged head of policy David Sinclair warned of a "ticking timebomb".

He said: "This report shows that there are some worrying trends in credit usage that could represent a debt crisis for those coming up to retirement. We know from working with older people suffering from chronic debt problems that even owing a relatively small amount of money can cause untold misery for those living on a fixed income."

The charity said the Government should introduce a strategy to continue progress in tackling pensioner poverty. It called for an overhaul of the Social Fund to meet the needs of the poorest pensioners.

Edited by grey shark

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A fair few people that I have spoken to about retirement and pensions, think that their home will be their pension. "Investing in a pension is a waste of money, my home will be my pension".

So, we hear about more and more pensioners in debt. Why can`t they just "cash in" on their homes ? Afterall, we have just had a "boom" in house prices, so what`s the problem ? ;)

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There has been anecdotal evidence about peoplebeing advised, and accepting mortgages that do not finish until after they retire. Monthly payments cannot be met!

The other ticking timebomb, I believe, is the millions of I/O mortgages that when the 25 years is up, lender asks for sum lent. Errr, I haven't got it! What, no repayment 'vehicle?' OK we'll have that house thanks.

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A fair few people that I have spoken to about retirement and pensions, think that their home will be their pension. "Investing in a pension is a waste of money, my home will be my pension".

So, we hear about more and more pensioners in debt. Why can`t they just "cash in" on their homes ? Afterall, we have just had a "boom" in house prices, so what`s the problem ? ;)

No problem.. all those pensioners will be rich once they have sold their homes and are living in the gutter...

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Also goes to show how many people didnt get much in the way of compnay pensions, in general they were reserved for the higher paid managers, while the plebs schemes were just enough to make sure your benefits were cut on retirement. This seems to be the outcome for most of the retired people I know and will get worse when the BBoomer bulge starts to retire in the next few years, most of them in the same boat. Not many I know (and Im one, at the tail end) believes that they can sell their houses and live it up, but Im sure theres a few out there who do. However when it comes to pension schemes, whether company or private, who do we trust?, My savings have dimminished in value enourmously over the last few years in real terms due to false inflation/interest rates paying much less than the real rate of inflation then being taxed on it. Successive governments have done everything they can to make you pay into one bubble or another and housing apeared to be the most worthwhile in comparison to fee stealing pension fund managers who loose your money anyway, either that or spend it all asap when you get it which is what the majority of people do.

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It is a worrying thought that you will work all your life and when retirement beckons still be in debt.

Most people really are between Scylla and Charybdis - with thinking they have to choose between pensions schemes or houses as their main retirement vehicle. Hobsons choice if there ever was one.

F

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How many are in Debt because they have funded deposits for their kids out of equity in their own homes? Will be interesting to see if their homes drop in price and that of their childrens

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Property and pension is not an either/or, just that sheeple convince themselves of that because they don't want to compromise their 'lifestyle'. You need both a roof over your head in retirement and an income to put bread on the table. How many people in the UK have ever thought, 'I'll put off this year's holiday / handbags / DVDs / etc to stick more in my pension / mortgage'? Best thing the govt could do is progressively wind up the welfare state, because I'm sure many feel the state will look after them in some way or other, when the fact is anyone under 40 is going to be left high and dry in old age.

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It is a worrying thought that you will work all your life and when retirement beckons still be in debt.

Most people really are between Scylla and Charybdis - with thinking they have to choose between pensions schemes or houses as their main retirement vehicle. Hobsons choice if there ever was one.

F

Without wanting to sound too 'fuddy duddy', your profile pic makes this forum unsuitable to read during my lunch break at work! :)

Is it possible to enforce slightly less racy profile pics please? Or, at the very least, no animated booby waving!!

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Without wanting to sound too 'fuddy duddy', your profile pic makes this forum unsuitable to read during my lunch break at work! :)

Is it possible to enforce slightly less racy profile pics please? Or, at the very least, no animated booby waving!!

Not wanting to hijack the thread but I made a similar comment about a year or so ago and was effectively told by the mods that they didn't care. To be fair Furbys pic is mild compared to some that were doing the rounds here back then. There is an option to turn off avatars completely. My personal opinion was that it gave the site less credibility if many of the posters effectively had porn in their profile.

The other ticking timebomb, I believe, is the millions of I/O mortgages that when the 25 years is up, lender asks for sum lent. Errr, I haven't got it! What, no repayment 'vehicle?' OK we'll have that house thanks.

Totally agree with that, there is going to be a world of pain for people who have I/O mortgages. Thing is that there are many 20-30 year olds with IO mortages who might still have a family at home come the end of the morthgage, not a great situation given that the only other option is to sell the house once the 25 years is up. I can see alot of banks just extending the IO period almost forever, effectively turning these "mortgages" in to renting from the bank for life.

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Help the Aged .. said new retirees face the "double whammy" of living on a fixed income while managing existing credit commitments.

Er, I make that a triple whammy so long as the BoE / Fed seem hell bent on inflationary stimuli.

Edited by Sledgehead

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A fair few people that I have spoken to about retirement and pensions, think that their home will be their pension. "Investing in a pension is a waste of money, my home will be my pension".

So, we hear about more and more pensioners in debt. Why can`t they just "cash in" on their homes ? Afterall, we have just had a "boom" in house prices, so what`s the problem ? ;)

If your house is your only 'pension', when you 'cash it in' you will need to release a sum that will provide at least £20,000 a year to live on.

At present rates (annuities, bonds, whatever) the difference between selling the present house and buying a smaller one would need to be around £400,000. That's what's needed to produce £20,000 pa income.

How many people will have properties that will release this kind of money?.

Unless you are selling a 4 bed detached in the SE, and want an ex BTL city centre flat in which to spend those autumn years...

I think the myth that there's somewhere on the coast where you can buy pretty little 2 bed cottages cheaply is still lingering in a lot of mimds.

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Totally agree with that, there is going to be a world of pain for people who have I/O mortgages. Thing is that there are many 20-30 year olds with IO mortages who might still have a family at home come the end of the morthgage, not a great situation given that the only other option is to sell the house once the 25 years is up. I can see alot of banks just extending the IO period almost forever, effectively turning these "mortgages" in to renting from the bank for life.

This situation can only get worse, the only way out will be to transfer the IO debt to your next of kin, inherited debt a policy for the future maybe, or take out a lifetime mortgage with any equity you may have built up, a product that will become more popular in the future I believe.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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