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Retirement and debt

If you're retired or approaching retirement and you have debts that you're struggling to repay, you're certainly not alone.

Last year, research by Saga suggested that one in five 60 to 65-year-olds were still paying off their mortgage, and were likely to use some of their pension to clear their debt. Similar research by Prudential earlier this year found that many people approaching retirement still have credit card debts to repay.

But what can you do if you're worried about debt at this stage in your life?

Getting help in the run-up to retirement

If you're not yet retired, you may feel there's still plenty of time to get help with your debts. The kind of help you'll need depends on how serious your situation is.

In less serious situations, all that may be required is some basic budgeting. Careful planning can help you to make room in your budget for your debt repayments, perhaps by cutting back on a few things you don't need or switching to a cheaper energy provider.

If your situation is more serious, there are a number of debt solutions that could help you, such as a debt management plan or an IVA^{(1 - more info on debt management and IVAs here)}. Any debt solution has its advantages and disadvantages - it can end up costing you more, for example, and can affect your credit rating - so make sure you discuss your options in detail with an expert debt adviser before you commit yourself to anything.

Also remember that your lenders are not obliged to accept any of these solutions. If you're nearing retirement, they may feel that you don't have enough time to repay a reasonable proportion of what you owe.

If that's the case, one option may be bankruptcy. Bankruptcy is a legal process in which your unaffordable debts will be written off by a County Court. You'll usually be discharged within a year, although you may be required to make some contributions towards your debts for a number of years after this. And if you're a homeowner, your home may be sold to cover your debts.

It's a big step to take, but it can at least offer you a way out of debt.

Getting help after retirement

After retirement, you may still be able to tackle less serious debts just by budgeting carefully. But your options may be more limited if you're struggling, because most debt solutions depend on you being able to contribute something towards your debts for a reasonable period of time. In this case, bankruptcy may be your only option - but make sure you get advice from an expert to ensure you've explored all your options before you make any firm decisions.