One in twelve over-55s owes money through payday loans as incomes are hit by high inflation and low interest.
New research from retirement income specialist Primetime Retirement shows thateight percent of those aged 55 and over have an average debt of £163 in short term or payday loans, which can charge APRs as high as 4,214%.
And they are turning to short-term loans despite making efforts to economise – Primetime Retirement’s research shows more than a third of those surveyed are currently rationing aspects of their lifestyle. 65 percent said they rationed going out, while more than 60 percent were also careful about buying holiday and clothes and 58 percent rationed their travel.
Average income for those aged 55 to 64 is around £318 a week after housing costs and tax – the equivalent of £16,532 a year. But that drops 24 percent for people aged 65-plus compared to those aged 55 to 64, Primetime Retirement says.
The company says the research highlights the income precipice facing many people in retirement and the need for increased flexibility and innovation in retirement income solutions to help avoid debt problems.
Marketing director Stuart Wilson said: “Payday loans are being increasingly used by people across the UK and the 55-plus age group are not immune. It is worrying that people who are close to giving up work still have to rely on debt to fund their lifestyles particularly when they will soon not have a payday.
“Very few people who are working would be able to comfortably absorb a 24 percent income cut, even if big bills such as mortgage repayments have gone, but that is the unfortunate reality for many in retirement. Rationing is inevitable given the current economic volatility but keeping your options open and retaining some flexibility in retirement is the best way to retain some control.”