'Crippling debts' hit retirements

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The average person aged between 50 and 60 who has taken out a debt management plan owes £41,400 through credit cards, loans and other unsecured borrowing, according to debt solutions group Payplan.

The figure is 25% higher than the amount of debt accumulated by other age groups, which averages £32,700.

Unsurprisingly, given the higher sums owed, those in the run up to retirement are also expected to take longer to clear their debts.

The average length of a debt management plan, an informal agreement with creditors under which debts are repaid at an affordable rate for someone aged between 50 and 60, is 11 years compared with nine years for other age groups.

The gap between the amount of time it takes older people to get back into the black compared with younger ones has increased by 27% during the past year, suggesting the problem of pre-retirement debt is getting worse.

Payplan, which analysed 40,000 debt management plans, said 14% of its customers during the year to the end of June were aged between 50 and 60.

The group said the level of debt people had in the run up to retirement was "hugely concerning", as people in this age group should be using their surplus cash to save for when they stopped working.

Managing director of Payplan John Fairhurst said: "Most people imagine that as they reach the countdown to finishing work they will have paid off their mortgage and be busily saving for a comfortable retirement.

"These figures show that this is simply not the case for many pre-retirees, and highlights a hugely concerning trend towards indebtedness in later life."