The families and pensioners who are slipping deeper into the red as average debt soars

Breaking point: The families and pensioners crippled by soaring debt

Two new reports have revealed that families are being financially crippled by spiraling debts

Money worried: Two new reports have revealed that families are being financially crippled by spiraling debts

Soaring average debt is pushing families and pensioners to breaking point as they sink deeper and deeper into the red, two new reports warn today.

One study found that one in five workers is in debt when they retire, often with a large mortgage and a personal loan. On average they owe 38,200.

Another report showed that the average family’s debts have ballooned by nearly 50 per cent over the last year.

In January last year, such families had average debts of 5,360. But this has soared to 7,944.

This does not include mortgage debts, only ‘unsecured’ debts such as an overdraft or a loan. If mortgages were included, the average family’s debt would be 110,000.

The first study, by insurance giant Prudential, polled more than 1,000 people who plan to retire this year.

On average, they will be spending 260 a month, a fifth of their monthly pension income of 1,290, just to pay off their debts.

Men’s debts tended to be much larger than women’s, at an average of 45,300 compared to 29,400.

Vince Smith-Hughes, a retirement income expert at Prudential, said: ‘Retiring with outstanding debts could be a sign of a lack of financial planning.’

The second report, from insurance firm Aviva, found many of the 10,000 families polled were meticulously planning their food shops to avoid waste and search out value brands.

But it also suggested that people ‘prioritise spending on immediate purchases and luxuries’, rather than facing up to the need to protect their families.

Around 50 per cent of families have a monthly satellite TV package, but only 40 per cent have life insurance.

Related posts:

  1. The 10,000 debt burden of the average family (and that doesn"t include 1.24trillion in mortgages)
  2. Ordinary families crippled by rocketing prices as bill for basket of essentials soars 43% in a decade
  3. One in ten pensioners over-75 still paying off their mortgage
  4. Christmas shopping will send a third of people into debt
  5. 700,000 families at risk of losing child benefit in bid to cut cash for high-rate taxpayers