Over 55s sucked into debt

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Saving more is a top priority for 65% of over-55 homeowners in the North West of England 2014 – but with 93% braced for rising living costs, many look set to continue raiding their existing savings pots or resorting to unsecured credit to make ends meet, according to new research from the Equity Release Council (The Council).

The research among UK homeowners aged 55+ shows savings are the first place they turn to when they need extra money, yet this has not shielded a worrying number from racking up debts they are struggling to clear. Around one in three (33%) are concerned about how to pay back what they owe in 2014: almost three in four of these (74%) have no plan in place while 68% are avoiding the issue.

Almost three quarters of over-55 homeowners (71%) in the North West view their savings as the first port of call for extra funds, with 16% using savings capital to pay everyday household bills and expenses in 2013 while 20% used savings interest for this.

Beyond savings, over-55s in the region are most likely to turn to bank loans (51%), overdrafts (45%) and credit cards (44%) to supplement their income. Growing numbers are exploring these routes: 5% with outstanding credit card debt took this out in the last year or owe more now than they did a year ago. The same is true of 40% with overdrafts and 19% with loans.

One in three (33%) used a credit card to pay every day bills and expenses in 2013, including 6% who fail to clear their balance every month.

Despite these difficulties, nearly two thirds of over-55 homeowners (65%) in the North West want to improve their savings habits in 2014 – making it their top financial priority. Yet with many savings rates stuck below inflation, 11% predict rates will drop even further while another 70% expect no improvement.

The chances of achieving their savings ambitions this year look slim with 93% expecting living costs to rise. More than one in three (35%) are braced for a significant increase. Keeping up with regular bills is their biggest concern (23%) along with boosting their income (19%).