Levels of borrowing reach new levels
People typically hope to clear their debts by the time they reach 57, but the truth is that they are more likely to still have debt at the age of 65, the age most people would like to consider retiring.
The reality is that they are likely to have hit their 69th birthday before they have paid off all their loans. This research confirms the data obtained by the Office for National Statistics (ONS) data on uk debt.
The UK adult population are now having to wait later in life to become “debt-free” Someone aged between 16 and 24 years old now could be aged 74 by the time they can celebrate becoming debt-free, the report found. Rising property prices lead to bigger mortgage debts.
Throughout the UK there are regional variations, for example a home owner in the North East could become debt free aged 57, whereas households in London will not celebrate their debt-free birthday until around 20 years later – at the age of 77.
The report confirms that householder tend to be over optimistic about the time it takes to repay the debts they have. Consumer research suggests that most people feel they could be debt free by the age of 50. In reality for most people this is very optimistic
The report concluded that most people are in fact aged 64 before non-mortgage debts are cleared.
UK Debt. Is it out of Control?
For the younger age group 18 to 24 year olds, the report paints a dim future. This group are the most optimistic about paying off debt early, have the highest amount of debt per person on average and will not pay off non mortgage uk debt till the age of 66.
When mortgages are taken into account, households containing people aged 35 to 44 years old tend to be the most indebted, the report found, owing £87,800 typically, as the average age of a first time buyer is 31 and most households have mortgages and other financial commitments at this age.
How to help yourself
Whilst it shows a big problem there are ways to improve the situation from a personal perspective. Having a structured financial plan to repay debt and consistently reviewing income and expenditure on an ongoing basis is the key to reducing debt. A review of expenses such as Gas, Electricity, Water and other regular bills can help.
Long term cash flow planning can really help you to focus on the future and how to plan in the short, medium and long term.
If you want to find out more about cash flow planning, please contact us.