The debt generation are getting older

posted by in Budgeting, Debt news

Mature couple and debt

Are you counting the pennies to get by?

Independent research published by StepChange Debt Charity today has found that middle aged and elderly people will be increasingly affected by personal debt over the next few years.

The research is contained within a report entitled StepChange Debt Charity Consumer Debt and Money Report Q4 2011 (PDF). It predicts that our share of clients aged 45+ will rise from an historic 28.0% in January 2005 to a projected 47.6% by December 2014. Those over the age of 45 will be the largest age group seeking debt help from us by that time.

If you find yourself in this situation, what can you do?

Currently, the 30-44  “mid-career workers” age group contact us more than any other. However the research found that as older people are benefitting relatively less from a reduction in mortgage costs (due to a lower burden of secured debt) and that the financial crisis brought large investment and pension losses for many older households, an older age group will need debt advice more and more.

Debt and age

Last year we produced an ‘infographic’ that clearly showed that debt and age are positively linked. The amount of debt a person reports to us increases with age until they reach their early 40s, after which it holds steady at around £25,000.

Especially concerning was the fact that people aged over 60 owed such large sums; the average debt of a client in this age group was £24,642. Older people are generally less able to pay off their debts, as they are on much lower incomes.

For the majority of over-50s today a worry-free retirement is becoming more of a dream rather than a reality.

What debt solutions are available?

If you’re suffering with problem debt then there are a range of solutions available. From a debt management plan, that reduces the monthly payment to creditors to a smaller one over a longer period, to opening up some of your house’s equity via equity release (if you own your own home), there are many options available to help you.

If your debts mean that a formal (legal) solution is required, then we oversee IVAs, DROs and bankruptcy. These might sound scary, but there’s less stigma around these solutions nowadays (it’s very unlikely your name will appear in the paper!).

In debt? What to do next

If you need debt help you need to contact us, rather than trying to carry on regardless. Whether you’re 25 or 65, you need to talk to us early, to avoid being caught in a debt spiral.

This is where more and more of your monthly income is going on paying the interest on your debt, rather than paying off the ‘capital’, forcing you to borrow more to survive. As we’ve said in today’s report, some families are now paying £200 a month just to cover the interest on their loans.

For a lot of the older generation the stigma of admitting to debt – that somehow they’ve “failed” – means that they find it hard to open up about their money worries. If that includes you, please don’t worry.

You can use our anonymous online counselling service Debt Remedy to find a solution to the problem or if you prefer to call, you can talk to us knowing that we’ll keep the conversation in strictest confidence.

Over tomorrow and Wednesday we’ll look at one of the options available to older people in debt, equity release. You can also read our retirement guide.

Peer's the digital content manager at StepChange Debt Charity. Apart from contributing to the MoneyAware blog and overseeing the charity's website and social media content, he’s walked to the top of every mountain and hill in the Lake District. Twice.

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