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A quarter of pensioners have borrowed money that they don't plan to pay back, a survey showed today.Research by the financial services company, Sesame, suggested that older people, who have traditionally been considered as uncomfortable with debt, were much more likely than those aged between 35 and 65 to have debts they had intention of clearing
The company said this was because the first generation of UK adults to experience the consumer credit revolution in the 1960s and 1970s was now retiring, but warned that people should be making better plans for their old age.
Spokesman Alastair Conway said: "People have to take control of their finances in the lead up to retirement and beyond, if we are to avoid adding to the UK's mounting debt crisis. This is because the ability of retired people to recover from bad financial decisions is more limited."
Debts that are outstanding when someone dies are paid by their estate, once any mortgage debts and bills are settled.
Of the 2,000 people aged over 35 who were questioned for the survey, 800 had outstanding debts, a quarter of them from the 65 plus age group.
While 93% of 55-64 year olds intended to pay off their loans through a mixture of cash, increased income and other means, only 73% of older people said the same.
Among those pensioners who did intend to repay their current borrowing, 11% said they would do so by consolidating it in a personal loan. A further 5% said they would consider withdrawing equity from their home.
Gordon Lishman, director general of the charity Age Concern England, said he was concerned by the increasing number of people turning to equity release as a means to raise cash.
He said: "The decision to release equity in this way is a major commitment and should never be undertaken lightly. "We would urge older people struggling to manage, to first check they are receiving all the benefits they are entitled to and explore all their other options."
Mr Lishman said pensioners were struggling because of rising bills for water, council tax and energy and a change in circumstances could be enough to force them into debt.
"Older people are less likely to be in debt because of over-spending and more likely to be in debt because of significant life changes such as retirement, illness, disability and bereavement," he said.
The Guardian, September 15th, 2006
