2016 retirees will have £3,000 less debt - report

One in five expect to retire while still in the red in 2016 says the Pru
One in five expect to retire while still in the red in 2016 says the Pru

People retiring this year are set to have £3,000 less debt typically than those who ended work in 2015, a report has found.

One in five (20%) people retiring in the UK in 2016 expect to be in the red, owing £18,800 on average, according to research from Prudential.

The average is £3,000 or 14% lower than the typical debt of £21,800 last year.

Women planning to retire this year with debt will owe around £17,800 - a sharp £7,000 fall compared with 2015. The debts held by men remain virtually unchanged at around £19,600.

People retiring in debt in 2016 typically expect it will take three and a half years to pay off what they owe, but more than one in 10 (13%) say it will take seven years or more, and one in 12 (8%) believe they will never be debt-free.

A separate report released this week from the Centre for Economics and Business Research (Cebr) found that 69 is the average age at which people can expect to celebrate their “debt-free birthday”.

The report, commissioned by peer-to-peer lender Zopa, found that people are generally over-optimistic about when they will be able to clear everything they owe, and underestimate their debt-free birthday by around 12 years.

The average level of retiree debt has fallen for four years in a row, halving since 2012 when people owed around £38,200, Prudential found.