Debt in retirement

It will get worse, I am sure about that because of the changes in when people can withdraw their pension fund and what they can do with it.

At 55 it is easy to think that in your 70s you will be so old you won't need much money and will be able to live on the state pension but it is not true! We are fit and still very active.

I know someone who withdrew their pension at 55 and spent the lot so that the state will have to look after her when she is older and needs care. I very much doubt if she is alone. There must be many more who do exactly the same.

I retired early due to issues with my job but as we had paid off our mortgage we were able to live on DH's salary so I did not claim my state pension. At that time it was worth leaving it to accrue so that it eventually paid out a higher rate. Now I get more than the full state pension even though I did not have the full 39 years of NICs. Forward planning, even when it meant going without at the time was well worth it. I know not everyone can do this but those who can will have peace of mind.

I too have a state pension with a bit of SERPS that puts me beyond benefits - I get £8,850 pa. That is it. So at 71 I have a part time job with flexible hous, including doing some work at home, but I struggle with it and because there are times when I can’t think straight I take so long to do things that I only claim for half the time I actually spend on it. I can’t see me being able to do it much longer, then it will be goodbye to the car and hello to a very restricted life. My children live too far away for a day visit and neither has a spare room (but one has a very comfortable couch). Train fare (with rail card) to either costs two weeks food shop. (no coaches). I belong to a U3A and at least with a free bus pass I can travel to a few different places to wander round and maybe buy a coffee. I just hope my hips and knees last me out so that I can get out!

Fennel The debtor's have to whistle for it.

While I know many people are retiring on small incomes and I realise only too well how difficult that is for those involved, it is worth remembering the recent statistics from the ONS showed that the average pensioner household has an income of £29,500 and most of us are much better off than our parents or grandparents were in old age.

As for debt, one in five have debts, 4 in 5 don't.

Sorry, creditors

I think the devil is in the detail here.

This year is one of 3 peak periods identified by the FSA for interest-only mortgages ending. There's no indication in the report if this has any influence on the figures, only that nearly 40% of the people had a mortgage debt. There's also no indication if people have made any other provision to pay off the mortgage - so I have to wonder how much of the 'debt' can be offset against things like an endowment policy or a savings account.

It depends on how people are prepared for the debt too - it's not an issue if you're planning to downsize from a large family home into something more manageable. I couldn't see if this was unintentional debt or something that is part of a plan (live in a big house, only pay the interest on the mortgage, sell it up when the children have gone in 20 years time and buy again with the residual - that plan would have made for quite a luxurious retirement in some areas! ).

There's such a big difference between this and having £20k on high-interest plastic because you can't afford to manage on a pension.

We are very lucky to have no debts as we paid off our mortgage when I was 40 at the point when my OH had to retire on heath grounds - in order to survive we had to get rid of our mortgage, so we downsized when we still had 3 children at home. So, what seemed like a disadvantage then as we had a small home (and had to part with a home we loved), is to our advantage now and we are reaping the rewards in terms of no debt.

OH pension is small because of his early retirement; and I only have a small pension too as I missed out on contributions when the children were little. But I was lucky to have my pension at 60 and really feel for those whose pensions keep sliding further out of reach.

Our pensions keep us afloat; and we are expecting our application for Attendance Allowance on account of OH's PD to be successful and to help towards the massive heating bills that result from a very thin sedentary OH.

Both sets of parents left us some money so we have a small amount of savings, but enough to feel we could cover most eventualities should they occur.

So - a mixed life financially, but we are privileged to be able to manage now.

I was interested in that figure MOnica because I had no preconceived opinion and checked it out. Apparently most of the increase since 1977 is from private pensions which is of course good but I wonder what the future will be like when 55 year olds spend their pensions so they can live off the state in future.

£29,500 is fine if you have paid off your mortgage but it is only £14,750 per person so not so good if you still have a mortgage and live on your own.

I certainly remember paying my mortgage at 15%. Mine was an endowment mortgage because ibn those days a woman was lucky to receive anything from the building societies.

I was just divorced so it was not easy. but I had moved to a smaller property so the other bills were smaller. I was very very fortunate to be able to take my state pension age 60. It must be hell on earth having to work until one is ?67 and maybe not in the best of health.

My sister in law by marriage is under the impression that the state will keep her in her old age.

charleygirl, the state will make up your SiL's pension up to £160 a week and while she will get help with rent and council tax, the system by which those on a low income, like £160 a week, get all the rent and CT paid has gone so some of that income will be going in rent and CT.

Sadly, some people despite all their own endeavours, cannot save much or any money and that is all they get but that someone, like your SiL, should choose to live on an income that small when they could with a bit of endeavour be more comfortably off makes my mind boggle.

That was my point MOnica, I think many will do just that and enjoy the money in their late 50s and early 60*. Ticking time bomb imo

My SIL is only getting child benefit for one now and that will stop soon- she has had 11 children so was far better off than I was and I was in a good job working full time.

Thanks MOnica for your input- she could easily have got a better paying job and is still only working part time. Her H thinks a full day's work is 4 hours so I think you get the drift in that family. I have kept quiet for many years!

Talking about interest rates. When millenials are moaning about how lucky we are, all those cheap homes, we should remind them more often on what interest rates we were paying on our mortgages. If interest rates were 10 - 15% now, house prices would plummet, but be just as expensive (in monthly mortgage payments) as now.

Generally, and I emphasise, generally, I do not have much sympathy for those with interest only mortgages with no plans in place to pay off the principle when it is due. Most of these mortgages were taken out by people trading up in order to buy an even better house. They knew from the onset that the capital would have to be paid back sooner or later and if the price of the house they were living in went up, then so would cheaper houses, so they might well not be able to afford a smaller property. My sympathies are with those who took out endowment policies that failed to deliver, but that has been known for a decade or more so they did have time to make other plans.

I am certain that this will get much worse because people really do not uderstand how much money is required to live with age related problems, ill health and accidents and the way in which costs are spiralling is pretty mind blowing.
I receive a small amount of state pension because I had to retire at 58 due to ill health but received nothing at all until I reached state pension age because I am married in spite of my acknowledged 'full contributions'. DH has an occupational pension as well as the state pension and fortunately for me is keeping all his promises in connection with 'in sickness and in health etc'
We had a small amount in savings and downsized to get rid of the mortgage as well as to make living easier but then had to borrow for unexpected problems with the new house but hopefully we will get rid of that in just over 3 years time. We manage ok at present but could have done without having to borrow for house repairs however we will be fine once we have cleared the loan. We borrowed from a family member as because of our ages we could not get a loan at a reasonable rate in spite of having a top credit rating and a guaranteed income. It would seem that loans, interest rates etc are totally skewed against older people. We use a credit card for purchases but clear it every month. We could seriously cut back if it was necessary but ill health has meant buying in help for the garden and house and it would be difficult to manage without that help.

Many of our own circle of retired friends already live very frugally in retirement with most money going on heating costs which are much higher in the UK than in many other countries. We feel that we are being treated as milch cows in that respect.
Our children do not expect to have a comfortable retirement with one of them convinced that retirement will never be possible at all due to inadequate income for the required savings. Another child does not expect health to hold up until the new retirement age with health already a problem 20 plus years before that date. The notion that the baby boomers have had it all is totally false as we can see that we are not any better off than our parents, the numbers just stack up in different ways. Inflation seems to be seen by some as a panacea for all ills but in reality is nobody's friend.

As you say Nonnie a ticking time bomb! I can see that measures may well have to be put in place to prevent people squandering their financial future but goodness knows what without great intrusion into people's private lives. I am sure that if they could do it they may well do so after the 'helpful headline hysteria' needed to ensure the right public opinion climate to achieve that end.

I totally sympathise with you Breda we are in a very similar position except we ploughed everything we had into keeping our small business afloat and pay our employees ( who I felt sorry for) . Despite the best advice to let it go . We just couldnt do it .
Never mind here we are . Working until we drop dead .

Oh Gillybob. ?

I totally sympathise with your position Gillybob. To have worked hard, and not only for your own futures but for your employees, and then end up in this position seems such a kick in the teeth.

We have never been in real debt. We have had the odd loan to buy a car but have always paid it off quickly. I suppose we have been very lucky. We bought our house for peanuts , lived in it for 40+ years and then sold it . As we lived in the SE we made enough money, after buying a new house in the SW to live comfortably. We both have occupational pensions also.
I know sever all people who also believe that when their money runs out, the state will keep them. They could be right.

We've no debt now, thank goodness. Our worst time financially was when all three DC were at university at the same time, and we were paying our mortgage, three lots of rent for them and tuition fees (fortunately nowhere near what they are now). We got by then by constantly moving from one interest free credit card to the next. It wasn't a problem then, when we both worked and we could see an end to it, but I would hate to have debt now that our income is fixed and our savings won't be replenished. I feel for anyone in this position, or anyone still having to shell out housing costs in retirement, whether mortgage or rent. So much in life depends heavily on the hand we're dealt, however much hard work we put in and however much we try to plan ahead. Where and to whom we were born, family breakdown, bereavement, our health and that of our family, the sheer ruddy luck of being in the right place at the right time - there but for the grace of God go any of us. As some replies have already highlighted, changes to the state pension age have hit a lot of us very hard indeed, and I do know women who are really struggling to cope, especially those on their own with poor health.

Now I don’t want to upset anyone, and there are situations like Gilybob’s and others on here where ‘things happen’ and an unfortunate circumstance or poor decision means people do end up in a bad financial situation through no fault of their own. And once in these situations it is very difficult to turn things around.

BUT I’ve come across a fair amount of people who simply do not plan for their old age and are reduced to trying to live on a State Pension. The number of times I tried to talk some of my younger colleagues into investing in a pension fund and it fell on deaf ears. The usual complaint being ‘I can’t afford it’ when in fact they couldn’t afford not to. Another explanation was that they wanted to enjoy the good things in life now and worry about the future when it happens.

There again though, Lady Luck has her way with us! I know there are better compensation schemes in place now, but not all pension planning goes well. One of my private pensions was embezzled many years ago, so that was money down the drain, and another is worth little more than what I put in but has conditions attached that mean I can't access it till my 66th birthday. As that's the day I finally get my state pension and become a tax payer again, I'll immediately lose a big chunk to tax. And yet, as I understand it, the opted out years I paid into these useless pots don't now count towards my state pension. Oh joy!

We survive on my state penison and a small works pension plus my DH'sESA as he isnt of penion age just yet. I was the main breadwinner for nearly 20years before retiring and we never had a luxury life but i saved as much as i could plus my mother left me a very small amount when she died so that was added to my savings for our old age. I draw on my savings every week to buy food or anything else we need as pensions and DH's money pays all the bills, rent and council tax.We don't claim HB or CT rebate as i saved too much to qualify for any help with those. I have also managed to go back to work on an add hoc basis for my old company which also helps. Every month i put money away for car insurance, Christmas, petrol, window cleaners this goes into envelopes and is locked in a tin money box. All other bills are paid by direct debit so we are very lucky that we are not in debt to anyone. I also grow some fruit and veg in the garden which helps with the shopping bills in the summer months. I put half the cost of these items if i had purchased in a shop into a tin and this pays for seeds, compost etc the following year. Everyone is different in how they handle finances and i have always been a saver and quite frugal and i am terrified of debt, it was drummed into me by my mother never ever owe anyone money and i have lived by that rule all my life. Sometimes i wonder if i have missed out but i feel content really that i dont have to worry to much about money in my later years.

I have tiny occupational pension pots to look to when or if? I ever get to retire! I am still early 50’s so probably won’t see state retirement until I am 67! Assuming that the goal posts are not moved yet again?
I am luck to be mortgage free, but do have a couple of loans taken out to do structural repairs which were hideously expensive?
my savings have gone over the last few years in helping two of my three adult children who were struggling, one at university with a small child the other as a lone parent; we live in the SE so cost of living and housing are out of all reason here and bear no relation to average salaries!
I am still working full time but like many others am a single person, my salary is decent and if there were two of us bringing in my salary we would be laughing, but It’s so much harder with one just salary! That said I have a good life now that I am not bailing out the adult children! I earn enough to be able to eat out when I want and can afford holidays, I don’t run a car though and can walk to work
While my children’s situations are now stable (their household incomes are now higher than mine thank goodness) I feel it’s underestimated in the media how much parents now have to heavily financially support the younger families, and not just with the oft cited house deposit!. Over the last 10 years I paid rent for them sometimes for long periods, cleared accrued fuel bills, paid for 2 DGC nursery costs and assorted activities, monthly bank transfers on top. I understood what a struggle it was for them and looked back at the virtually no help my own parents gave us when they could have done! So I don’t regret it but it’s left me with little rainy day money now?
I do plan to cash in my pension pots when I reach 55 (I read others criticisms) but will invest it (assuming the market is the same as now) in a holiday property to rent out in the SW I have already researched this, and worked out that even allowing for the running costs, empties, and repairs, the income will be far higher than my measly pensions would return for me when that time came! And I consider this a sensible way to use the money. I also plan to downsize in the next year, I am luck to live in a large house in SE and will be planning to move to a smaller 2 bed place freeing up equity to hopefully buffer me later on. However so much depends on the state of the economy and assuming I don’t get ill?

You can’t buy peace of mind. We are lucky if we can put our heads on our pillows at night with no financial worries.

I've never been in debt at any point in my life and in retirement with no mortgage to pay I feel comfortable - but I still do some private work from home and this has enabled me to save until the last year when the fallout from the Brexit vote began to occur and absolutely everything I buy began to increase in price. So whilst I'm not going into debt my savings are at a standstill. I pity those who have no savings at all and see their weekly shopping basket rising by 25%. I also get very angry at the thought that millions of older retired people brought this on others by sticking their heads in the sand and voting to leave the EU - sorry for the political angle here, but it's entirely the fault of that Brexit lobby that more and more people are feeling the pinch and some living in poverty.