One in three retirees are in debt – and owe a median of £17,000

A third of retired people have debts to repay, according to a study, with each person owing an average of £17,000. 

This means that around 3.3million retired people are in debt, with a combined outstanding balance of £58billion.

That could include credit cards, loans, car finance and increasingly mortgages, as rising costs mean a growing number of people fail to pay off their home loan by retirement. 

In the red: A third of retired people say they have debts, according to a SunLife survey

According to the survey by the life insurance firm SunLife, these retired people are spending £602 per month in order to repay their debts on average. 

That equates to £7,226 per year, or roughly a quarter of the average annual household income of retired over-50s. 

As many as half a million, of five per cent, of retirees still have yet to pay off their mortgage, with the average mortgage debt amounting to £63,644 per person.

However, by far the most common debt type among retirees is credit card debt, with a quarter, 25 per cent, of people owing an average of £3,566. The average monthly repayment is £408.

Mark Screeton, chief executive of SunLife, said: ‘While inflation may have dropped from 6.7 per cent this time last year, to 2.2 per cent, the cost of living – including the increasing cost of debt – is still having a huge impact on the personal finances of retirees.’

Personal loans and car finance accounted for six and eight per cent of loans among retirees respectively, with retired over-50s owing an average of £6,918 for personal loans, and £12,582 for car finance.

Some 72 per cent of retirees own their homes outright.

On average, retirees purchased their home 24 years ago, during which time its value will have increased 317 per cent.

This allows them to possibly use equity release to pay off their debts, although this should be treated with caution as the interest charged compounds over time and can end up being substantial. 

It allows homeowners over the age of 55 to draw on their home’s value in their retirement by taking a loan repayable on the sale of their home after their death.

There is no need to make monthly payments, but equity release leaves less for to your loved ones as an inheritance, so it may be worth looking at alternative ways to raise income, such as by moving to a smaller home in order to free up cash.

Screeton said: ‘Of course, equity release isn’t right for everyone, so it’s best to speak to a financial advisor to find out more about the options available to you and your specific circumstances.’