A recent story from “This is Money” surprised me; but I can see now that it should not have been a surprise.
Here’s a summary:
According to debt advice charity Stepwise, the effect of rising living costs is pushing more and more over-60s into debt. The numbers in the report were pretty dramatic.
The number of over-60s who contacted them for debt advice had increased by 39% from 2009 to 2012.
And in 2012 the average debt of those over-60s was higher than any other age group.
For example, on credit card debt alone, the over-60s had average debts of about £15,000, which was 50% higher than the average of all age groups.
StepChange’s director Delroy Corinaldi talked of a key reason: that ‘those in this age group who are struggling with debt are particularly vulnerable, as their earning potential has diminished’
Another explanation: age campaigners have complained that ‘rises in living costs hit older people harder because they spend a greater slice of their income of everyday essentials such as food, heating and electricity. These have risen in price more quickly than the overall rate of inflation.’
COMMENT FROM THE BACK TO THE BLACK TEAM:
The facts speak for themselves. And the explanation is totally logical.
The “living costs” part of the explanation was emphasised in a recent article from “Investment News”, the monthly magazine of the investment supermarket Hargreaves Lansdown. I’ll cover that in a future post.
WANT TO READ THE FULL STORY?
Here it is!
THE SILVER DEBT CRISIS: OVER-60S REPORTING HIGHER CREDIT CARD DEBT THAN ANY AGE GROUP AS LIVING COSTS BITE
By ED MONK, This is Money
Published 9 May 2013
Levels of credit card debt are higher among the over-60s than the population as a whole and increasing numbers are resorting to debt advice, a debt charity has reported.
The alarming warning contradicts the stereotype of younger people being the most indebted and highlights the financial difficulty many older people are suffering even after they retire and are unable to easily boost their earnings.
It comes as another charity, Age UK, launched a campaign today to ensure older people claim all state benefits owed to them to alleviate rising living costs. (See below).
Age old problem: Over-60s looking for debt advice have more on credit cards than younger people.
StepChange, the debt advice charity, reported that the over-60s clients that it advises have average debts of £22,999 each, versus an average of £17,635 across all clients. The figures relate to unsecured debt and do not include mortgages.
It is credit card debts that are weighing most heavily on older people. StepChange clients above the age of 60 had an average £15,152 of credit card debt, versus £10,006 for all age groups.
(that’s 50% higher! – Ed.)
The same trend is evident for catalogue debt – £2,026 for the over 60s compared to £1,808 for all age groups – overdrafts – £2,467 compared to £2,026 – and store cards – £2,005 compared to £1,196.
Step Change said that 13,148 people over 60 contacted it for advice last year, up 39 per cent from 9,628 in 2009.
Delroy Corinaldi from StepChange said: ‘Whatever someone’s income level during their working years, most would expect to be in a stable, if not comfortable, financial situation when they are older. Unfortunately those in this age group who are struggling with debt are particularly vulnerable as their earning potential has diminished.’
One possible explanation for the trend may be that older people are unable to easily increase their income, meaning that any debt they have when they stop work becomes unsustainable more quickly than for working people, pushing them to seek advice sooner.
Additionally, this generation had access to higher levels of borrowing prior to the credit crunch.
Age campaigners have complained that rises in living costs hit older people far harder because they spend a greater slice of their income of everyday essentials such as food, heating and electricity. These have risen in price more quickly than the overall rate of inflation, currently just 2.8 per cent.
Charity Age UK reported today that almost a third, 32 per cent, of older people admit to struggling financially, with more than half, 56 per cent, worried about basic living costs such as buying food and keeping warm.
Age UK said that its research showed a third of older people are feeling financially worse off than this time last year, a quarter admitted they had cut back on luxuries and a fifth said they had bought cheaper or less food.
One in five had cut back on heating their home this winter
The charity has launched a campaign to encourage older people to claim all the state benefits they are entitled to. The campaign is being backed by high-profile money saving expert Martin Lewis.
Despite over four million pensioners being entitled to pension credit, Age UK said, a third of those who are eligible don’t claim it. Yet if all those who are entitled to Pension Credit put in a claim, it could boost their income by an average of £1,716 a year.
Michelle Mitchell, Age UK’s Charity Director, commented: ‘At a time when so many people are struggling financially, it is a huge concern that vital benefits are failing to reach some of the poorest and most vulnerable older people in our society. This is money that could make a real difference to their quality of life.’
The call is at odds with Government noises that wealthy pensioners should give up universally available benefits such as the Winter Fuel Payment and free TV licences.
Age UK has just published a new guide – ‘More Money in Your Pocket’ – to help older people claim the benefits they are entitled to. To order the booklet, call Age UK Advice free on 0800 169 65 65 or visit www.ageuk.org.uk/letstalkmoney, where there is an online benefits calculator to show what extra support may be claimed.
1. The debt advice charity StepChange was previously known as Consumer Credit Counselling Service.
2. For more articles on personal finance from “This is Money,” go to www.thisismoney.co.uk
3. For information about my book “Back to the Black: how to become debt-free and stay that way”, click HERE.
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