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Debt In Retirement
Pensioners should be enjoying later life, relaxing and making the most of their well-earned retirement. However, increasing numbers of over 60s are facing their later years with a barrage of debts to pay. The number of over-60s with money worries grew faster than any other age group last year according to debt charity the Consumer Credit Counselling Service(CCCS).
The average CCCS client over 60 had a debt of £31,867 in 2006, compared to just £12,790 for those aged 18-24. Part of this is down to the increased cost of living, and the common willingness of banks to offer credit card limits far above pensioner’s incomes.
Even if you’re struggling on a state pension of only £7,500 a year - as many pensioners today are - you can fight your money problems without resorting to expensive borrowing.
Budget
You need to work out where your money is going before you can do anything about your situation, so write up a budget, detailing all your incomings and outgoings.
Then you need to prioritise your repayments. Anything secured against your home has to be paid first as you could lose your home if you don’t keep up with repayments. After that, anything that could land you in court such as council tax and the TV licence or essential amenities that could be cut off need to be paid. Finally, other bills need to be attended to.
You can download budget forms from the Help the Aged website to help you keep track of your finances.
Stop your borrowing
You should not give in to the temptation of a credit card. Even if you’re having money problems, as a pensioner your income will be static so you need to ask yourself how likely it is that you’ll be able to pay back what you’ve borrowed.
More borrowing is rarely the answer to money problems, so taking out a loan isn’t advised either. However, if you feel that you really have no choice, try to go for an unsecured loan so that you don’t put your house at risk.
Millions of pounds in benefits are left unclaimed each year, and that’s money that could be helping you make ends meet. Visit EntitledTo.co.uk, where you can work out exactly what you should be receiving. As well as your regular state pension, you could qualify for council tax benefit, a Christmas bonus or Winter Fuel Payments. You can also use the Help the Aged website for more information on benefits.
Switch your suppliers
Switching to different providers for things like gas, electricity, home phone and broadband can save you loads of money and get you better value too. You should also check providers for special deals, such as the British Gas/Help the Aged partnership. Click here to compare and switch your Gas, Electricity, Home phone and Broadband.
Changes around the home
Another way of saving money is by making small changes around your home like turning your thermostat down, installing a water meter and lagging your boiler. These small differences can save you more than £800 in total. Click here to read about more how to Save in Your Home.
Spend according to your means
While it might be tempting to carry on helping your adult offspring financially and treating the grandchildren, if you’re having financial difficulties you need to stop doing this. Talk to your family and loved ones and let them know the situation so that they can help.
Use your savings
It is always advisable to have money saved for a rainy day, but if you’re paying interest on debt that you owe to credit card companies and loans then you really should use your savings to clear your debts. This could well be a painful task, but otherwise you’ll be paying out far more in interest each month than you’ll be earning back on your savings. Once your debts are clear you can start to save again, in the knowledge that your nest-egg is actually making you money.
This can be a sensitive issue for people who have lived in the same house for many years, but according to Help the Aged, there are times when people need to consider selling up and moving to a smaller, more affordable home. However, this is not a decision to be taken lightly; speak to an independent financial adviser, your family and a debt advice charity (see useful links), before making any rash decisions.
Talk about it
A huge part of the over-60’s debt problem is the fact that many are still reluctant to talk about their money problems, but being open and honest about your money problems can save you far more hassle further down the line. Get in touch with Help the Aged, the Citizens Advice Bureau, National Debtline or the CCCS (see useful links). As well as giving advice, these companies can help to renegotiate an affordable payment plan with your creditors, freezing any interest and ensuring that you no longer receive bailiff’s threats.
