The 'baby boomers' whose coming of age coincided with the birth of the credit card 1 are running up more debts in their 50s than previous generations, according to new research.
The research, published jointly by Consumer Credit Counselling Service and Age Concern, analyses patterns amongst different age groups seeking help with debt. It shows that people in their 50s not only owe more in total (just under £20k non-mortgage debt) than younger clients but they also owe more relative to their income - more than 20 times their net monthly income on average.
What's more, over indebtedness levels for the over 50s seeking help with debt appear to be getting worse and could impact on their ability to save for retirement. Government figures suggest that three million people are seriously under-saving and up to 10 million should consider saving more. 2
At a time when the Government is considering whether people should be forced to save into private pensions, increasing financial pressures such as the cost of care, funding children's university education and the consequences of redundancy leave many over 50s building up bigger debts rather than pensions.
The research is based on an analysis of 21,000 client records of those people who sought help from CCCS over the five years since 1998 3. While younger people are more likely to seek help with debt problems, its main findings are that people in their 50s:
These findings suggest that when it comes to debt, the generation known as the baby boomers may be following its usual practice of over-turning social norms. As they approach retirement, some of the baby boomers are unlikely to conform to the conventional stereotype of older people being careful with money and avoiding debt. Malcolm Hurlston, CCCS chairman commented:
"The baby boomers are taking on more debt in their 50s than previous generations. This could be due to a number of factors including: a higher expectation of retirement, redundancy, a lower than expected retirement income or simply a different attitude to debt. This generation would have seen "Live Now Pay Later" as teenagers and lived through the launch of Barclaycard and Access.
Gordon Lishman, Age Concern's Director-General said:
"This research offers a valuable snapshot into the attitudes of the next generation of pensioners. Older people have historically been reluctant to get into debt but some of the next generation of pensioners appear to have quite different attitudes."
"With the Government switching the emphasis from the State to the individual to provide for later life, retirement is likely to come as a shock for those who are not saving enough. Many people are not in a position to save more or cannot afford to shoulder the risk. It's time for the Government to take control of the pensions crisis and commit itself to improving the state pension system."
As CCCS is a charity offering free advice, the data set consists of borrowers who have recognised they have a debt problem and have sought help. However the large number of cases analysed suggests that this provides a good indicator in borrowing behaviour. Out of the 21,000 records examined, 2,400 were for people in their 50s.
The data set excludes non-mortgage debts in excess of £100,000, as these may often include trade debts, or in some other way be atypical of the normal borrower. Debt-income ratios in excess of 300 are also excluded for similar reasons.
CCCS helplines are open 8am-8pm Monday to Friday on 0800 138 1111. There is no charge for any of its services.
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For further information contact:
Frances Walker (CCCS) Susanna Mordaunt (Age Concern)
Notes for editors:
* CCCS answers 200, 000 calls for help a year and provides in-depth advice sessions for about one third of these. At any one time, CCCS has 40,000 people on debt management plans, re-paying over £6m to creditors. CCCS makes no charge for any of its services which include help with budgeting and money management as well as continuing support for clients on debt management plans.
* Age Concern is the leading charity in the UK concerned with ageing and older people, and works to improve the quality of life for all older people. Visit Age Concern's website at www.ageconcern.org.uk.