3 in 10 older people in debt are struggling to repay

Three in 10 (28%), or 1.1 million, of older people in debt are considered to be in "problem debt" and are struggling to repay,(1) according to new research published today by the International Longevity Centre - UK (ILC-UK) and Age UK.(2)

The findings, using data covering 2002-2010, reveal that around 6% of over 50s in England faced debt problems(3) in 2010 whilst around a quarter of the older population were using unsecured credit. And while the overall numbers of people with "problem debt" remained virtually unchanged between 2002 and 2010, among those with unsecured debt, 28% were considered to be in problem debt in 2010 - a rise from 23% in 2002.(4) Among the over 50s population, the older people are, the less likely they are to have debts; even so, of those aged 70 and over with unsecured debts, one in six are struggling with problem debt.(5)

The latest figures also show that 10% of older people with unsecured debt - around 400,000 - are paying over £85 a week to service their debt.(6)

It is widely acknowledged that debt problems seriously impact on people's quality of life and relationships, but for the first time, this research shows that older people who enter problem debt are over twice as likely to experience marital breakdown as those who do not.(7)

Significant levels of debt for people in or approaching retirement can cause particular hardship as the options to repay debt at this stage in life are often more limited or non-existent. The ILC-UK and Age UK are warning that the increased financial pressures older people have faced over the last decade, such as rising prices for energy, are likely to have contributed to the increasing amounts of debt owed among the over 50s. Generational effects also have had an impact, such as the fact those reaching retirement now are more used to credit cards and other forms of borrowing than older pensioners.

Published today, the new report, ‘Tales of the Tallyman: Debt and problem debt among older people,' highlights those most at risk from debt. The figures show that in 2010, self-employed older people were twice as likely as retired people to be in problem debt, with unemployed older people three times as likely(8) - this is particularly worrying considering that growing numbers of older people are becoming self-employed, with those 50 plus making up 84% of the increase in self-employed workers since 2008.(9) Having a mortgage was also a key risk factor, with owner-occupiers with a mortgage five times more likely to be in problem debt as owner-occupiers without a mortgage.(10)

The research shows that while the numbers of those aged 50 and over using credit dropped by 10% between 2002 and 2010,(11) the amount those with unsecured debt owe increased substantially, rising from £1,500 in 2002 to £2,500 in 2010 on average - an increase of two-thirds in cash terms.(12) Among these debtors, 10% had debts of £15,000 or more.(13)

This research supports anecdotal evidence from Age UK advisors who report that they are seeing more cases of older people experiencing debt problems.

Commenting on the findings, Michelle Mitchell, Charity Director General of Age UK said: 'There is a small group of older people who are facing the nightmare of increasingly serious debt problems which doubles their chance of their marriage breaking down and can ruin their quality of life.

'While it is good news that overall debt among the older population is falling, this research, supported by evidence from other charities, sends a clear warning that funding for debt and money advice for older people must be protected and expanded.  Debt advisors need to understand the specific needs of older people often living on low fixed incomes and particular attention must be paid to those moving into self-employment or who have recently become unemployed.'

These findings follow a recent report by StepChange Debt Charity, which showed that although older people make up a small proportion of their client base, people aged 60 and over seeking their help had, on average, higher debts than any other age group.(14)

However, it's important to remember that older people still have more negative attitudes towards using credit and less likely to have debts than younger age groups.

Baroness Sally Greengross, Chief Executive of ILC-UK, emphasised that: 'Without further intervention, problem debt will continue to blight the lives of older people - impacting on their relationships, quality of life and mental health. This is why it is so important that government makes a commitment to protect funding for debt advice services, and that these services are targeted towards those that need help the most.'

If you are an older person who is worried about debt or managing your money, Age UK can help. The free factsheets ‘Debt Advice No.75' and ‘Managing Your Money' provide basic information and are available at the Age UK website or by calling our free Advice Line on 0845 65 65 65.  The Advice Line also provides advice over-the-phone or can signpost you to a local organisation.  Alternatively call your local Age UK to speak to an advisor.

-ENDS-

Case study
A retired man who contacted Age UK had been widowed 4 years before. His wife had always dealt with all the paperwork and finances and he was now in debt. He was having difficulty understanding the statements, bills and insurance policies. The Age UK adviser visited and helped him go through the papers, check through all his finances and set up direct debits. Afterwards he said he felt much more confident about dealing with money. Source: Local Age UK Information and Advice Service

Secured and unsecured debt
Secured debt is outstanding debt that has an asset as collateral, with the most common arrangement being a mortgage based on property. With unsecured debt, the arrangement is based on an agreement to pay back the money and is not linked to an asset. For example, this would include money owed on credit cards.

Problem debt
There have been many attempts to define when using credit or having debts becomes problem debt but no consensus. Page 10 of Age UK's summary of research by the International Longevity Centre, ‘Problem Debt Among Older People,' details the indicators used for this research. 

• For a full copy of the report ‘Tales of the Tallyman: Debt and problem debt among older people,' please contact David Sinclair, Assistant Director, Policy and Communications at the ILC-UK on 07543 646992 or davidsinclair@ilcuk.org.uk.

• ‘Problem Debt Among Older People' - Age UK's summary of research by the International Longevity Centre - is available from the Age UK press office. 

• The report is being launched at an ILC-UK/ Age UK event ‘Debt and problem debt among older people' in London on Tuesday 4 June. For more information about the event, please contact David Sinclair, as above. 

Notes to Editor

Media contacts: Vicky Smith/ Helen Spinney (Age UK)
Telephone: 020 3033 1444/ 1713
Out-of-hours: 07071 243 243

(1) Among those with unsecured debt, the percentage of people in problem debt rose from 23% to 28% between 2002 and 2010 (p. 10, Problem Debt Among Older People, Age UK).
(2) ‘Tales of the Tallyman: Debt and problem debt among older people' is a new report from the International Longevity Centre-UK, with a summary by Age UK. It reviews existing literature and provides new analysis of the British Social Attitudes Survey (Great Britain), the Family Resources Survey (covering the UK) and the English Longitudinal Survey on Ageing (ELSA) of which there are currently five ‘waves' available covering the years from 2002 to 2010. The figures in this release are based on ILC-UK analyses of the English Longitudinal Study of Ageing (ELSA), a study of those aged 50 and over.
(3) According to the ILC-UK's definition (p. 10, Problem Debt Among Older People, Age UK), around 6% of people aged 50 plus are in ‘problem debt' - around 1.1 million. There are 18.3 million people in England aged 50 and over (2011 Census data).
(4) Page 10, Problem Debt Among Older People, Age UK.
(5) Page 13, Problem Debt Among Older People, Age UK.
(6) People with unsecured debts typically paid around £14 a week servicing these in 2010, but one in ten - an estimated 400,000 over 50s - were paying £85 a week (p. 9, Problem Debt Among Older People, Age UK). All figures relate to England only.
(7) A small number of older people in the research experienced marital breakdown between 2002 and 2010 - that is moving from being married to a different status (other than being widowed). Those who entered problem debt were over twice as likely to experience partnership breakdown as those who did not. However, this pattern was not found among those who entered unsecured credit arrangements but were not in problem debt. This suggests that problem debts could have contributed to the breakdown (p.16, Problem Debt Among Older People, Age UK).
(8) Self-employed people were twice as likely as retired people to be in problem debt, while unemployed people were three times as likely (p.13, Problem Debt Among Older People, Age UK).
(9) The number of workers who are self-employed in their main job rose from 367,000 between 2008, the start of the economic downturn, and 2012. 84% of the increase in self-employed workers since 2008 was for those aged 50 and above (Office of National Statistics).
(10) Page 13, Problem Debt Among Older People, Age UK.
(11) The proportion of older people with any kind of credit or debt fell from more than four out of ten (42%) in 2002 to less than a third (32%) in 2010. The main falls were in 2004 and 2006 before the 2007-08 financial crisis started. There was an increase in the proportion in debt in 2008, and then a fall in 2010 (p. 9, Problem Debt Among Older People, Age UK).
(12) Overall, among those who had unsecured debts, the amount of money owed increased substantially - the typical (median) amount owed was £1,500 in 2002, rising to £2,500 in 2010 (p 9, Problem Debt Among Older People, Age UK).
(13) Page 37, ‘Tales of the Tallyman: Debt and problem debt among older people,' ILC-UK.
(14) Last year, 13,148 people aged 60 and over contacted StepChange for help, a 36% increase since 2009 when 9,628 people in that age group sought its help. The over 60s owe more than any other age group seeking the charity's help, averaging £22,999 last year, almost five thousand pounds higher than the average debt for all of the charity's clients which is £17,635.

ILC-UK
The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate.

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