Debt and Pensioners

Pensioners are particularly at risk of debt as they tend to be limited to fixed pension income and spend a large proportion of this fixed income on utilities and necessities such as heating, lighting, food and petrol. The difficulty here is that over the past year these costs have rocketed, thanks to rising inflation and wider problems and fluctuations in the global economy, and hence elderly people are at more risk of debt as pensions are not adjusted to the same degree. Many pensions aren't index linked - or are simply inadequate - so if pensioners find they are unable to reduce other discretionary spending, they may suddenly find themselves in real financial difficulty. In fact, over 8000 pensioners became bankrupt last year which is a huge leap since 2002, when a mere 900 pensioners declared insolvency.

Debt Problems

There are other problems too - life expectancy is increasing and pensions may not be large enough to cope with current costs of living. Savings may also be eroded by rising inflation - and for pensioners who had invested heavily in the stock market their own personal wealth may have been seriously damaged by the recent stock market downturn. There is also a difficult transitional period for newly retired pensioners who are still likely to be highly sporty, social and active, and who may find it difficult to adapt to their new lower income - and who may even have ongoing debts on mortgages, credit cards or other loans which are suddenly more difficult to pay. Many 'younger' pensioners may have also taken out loans and credit cards with the assumption that they'd be paid off with their home's equity - or similarly, taken out equity-release packages, and now found that their personal wealth has been severely dented by the falling housing market.

A further problem for older pensioners too is the perceived social stigma of debt and a reluctance to seek solutions such as debt management plans or IVAs. They tend not to wish to burden their families with worries - or may even find themselves at risk of bad advice and unscrupulous third party agencies who sell them expensive debt solutions.

Some OAPs also may not have easy access to debt management advice, or be unaware of benefits or assistance they may be entitled too - or more competitive tariffs for things like energy bills. For example, many pensioners find themselves on pre-payment heating meters, which are traditionally far more expensive than competitive tariffs - and they may not automatically be put onto a social tariff by their energy provider.

Debt Advice

The important thing for pensioners to do firstly is to consult a specialist organisation such as local Citizen's Advice or even agencies such as Help The Aged, all of whom can provide specialist advice, guidance and reassurance to financial worries. As with all people experiencing debt, often the first step in tackling it is the hardest - particularly so for an elderly person who may still remember the heavy stigma of debt from old - but they will also find a great deal of relief and the feeling of a burden lifted once they can share the problem, discuss solutions and get given the help they need to move forward.