The generation that can't afford to retire because of soaring debt

Soaring levels of debt among those in their late 50s and early 60s means many will have to keep on working long after their retirement age.

On average, they owe at least four times as much as people of the same age a decade ago, according to a study.

The debts do not include mortgages, if they have one, only unsecured loans such as credit or store cards.

In a bleak warning, the report says that many will be forced to keep working, possibly into their late seventies, to repay credit card borrowings, overdrafts and personal loans.

Record numbers of pensioners are already working, with nearly 1.3million women over 60 and men over 65 in jobs.

The study by the charity Help the Aged is one of the biggest undertaken in Britain into old age and debt.

It showed that one in four aged 55 to 64 were "credit users" and they owed an average of £2,500 in unsecured debt.

Though the sum may seem modest, Help the Aged warns that even a small debt can cause misery for those on fixed incomes.

David Sinclair, of Help the Aged, said those surveyed are the first generation to grow up with a "spending, not saving" culture.

He warned of a "ticking timebomb" and added: "This report shows that there are some worrying trends in credit usage that could represent a debt crisis for those coming up to retirement."

He said many have spent their whole lives in debt, juggling credit cards and constantly increasing their overdraft limit.

Mr Sinclair said he fears for the sorts of retirement that these people will face, compared to the traditional dream of relaxing and travelling.

"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," he said.

Philippa Gee, investments director of the financial advisers Torquil Clark, said: 'These figures highlight the crippling reality of the situation. This problem will not go away. It

will stay with us for decades and could deteriorate further.

"Retirement is no longer viewed as a welcome relief, many see it as a financial battle, where they cannot possibly hope to be the winners."

The report paints an equally worrying picture for those who have already retired, but are

still struggling with life in the red. Some 1.5million over the age of 60 have a mortgage, according to the report.

On average, they still owe about £30,000 on their home, a figure which has trebled over the last decade.

More than 160,000 pensioners are using their credit cards to pay for "basic items", such as food and household bills.

On average, they are using their credit card at least six times a year to cover living costs and fail to pay off the full amount at the end of each month.

The report, compiled for Help the Aged and Barclays by Bristol University's Personal Finance Research Centre, found particular levels of financial distress among the over-80s.

Other than teenagers, they are the most likely not to have any money saved up.

This includes having no spare in their current accounts as well as not having a savings account. About 60,000 over-80s are still repaying their mortgage.

Debt experts said they are increasingly having to deal with those approaching retirement, or in retirement.

Many "cash-poor, asset-rich" pensioners are getting at money invested in their homes through equity release loans.

The numbers are likely to keep on growing, according to Safe Home Income Plans, the industry body for the equity release sector.

Director general Andrea Rozario said: "Declining levels of private pension provision and meagre state pension benefits will drive more people in this country to explore alternative ways to top up their income."

Philip Hammond, Tory Treasury spokesman, said: "Under Gordon Brown, older people in Britain face soaring living costs.

"With spiralling food, fuel and housing bills, it is no surprise that so many have burdened themselves with debt to try to make ends meet."

•Share turmoil takes a toll too

Up to 350,000 Britons could be forced to delay their retirement plans due to the stock market turbulence, experts warned yesterday.

Falling share prices have cut the value of some personal pension pots by up to 20 per cent since last summer.

Tom McPhail, head of pensions research at the financial advisers Hargreaves Lansdown, said many face a cruel choice.

"It is a gamble," he said.

"They can cash in their pension now and accept that they are looking at a lower income for the rest of their lives.

"Or defer cashing in, but this means they will probably have to keep on working.

"We are suggesting to people that if they don't need to cash in their pension at the moment, there is an argument for holding fire."

Workers with a "final salary" pension are not affected by the state of the stock market, because their scheme guarantees to pay a percentage of their earnings.

Other schemes do make such guarantees and the value of their pension could plummet along with share values.