October 3, 2007

Rise in pensioner bankruptcies

by Gill Montia

Story link: Rise in pensioner bankruptcies

According to Wilkins Kennedy, the accountant, the number of people aged over 65 who are declaring themselves bankrupt has more than doubled in the past five years.

The firm estimates that so far this year, 7% of all bankruptcies have been amongst retired people.

In addition, the number of people in this group declaring themselves insolvent, which is a step that can be taken to avoid bankruptcy, is estimated to have risen ninefold since 2002.

The financial pressures on pensioners include rising household bills and interest rates, home improvement costs and gifts and loans to children.

With food, fuel and council tax bills all increasing, some are also attempting to help their children and grandchildren get a foothold on the property ladder.

In addition, higher borrowing limits have enticed over 65s into taking out loans, which they cannot afford.

Recent reports have estimated that the retired population in Britain owes a total of £57 billion.

This means that the average pensioner is carrying a debt of £5,900, in credit cards and loans.

Research from Scottish Widows shows that one fifth of all pensioners (over one million people) still have a mortgage, with one in eight owing more than £50,000.

Alliance Trust, the financial services group, has calculated that pensioners are the group to have been hardest hit by the rising inflation of the past four years.

It estimates that the rate of inflation for over-75s is between 0.75% and 1% above the inflation rate for the average UK householder.

Analysts expect the number of bankruptcies involving pensioners to increase as those entering retirement find they are unable to continue to pay off debts once their incomes falls.