A youth of labour – but no age of ease?

The Irish poet Oliver Goldsmith penned these verses about retirement in 1770:

“How blest is he who crowns, in shades like these,

A youth of labour with an age of ease”

However, this age is far from easy for many who are faced with no choice but to declare bankruptcy in later life.

The number of bankruptcies in England and Wales among people aged 65 and over is relatively low (1,284 or around 3.1 people per 10,000 population in 2009) and even among the 55-64 year olds (at 8,208 –that is, 12.6 people per 10,000 population) is not as high as that for younger groups ( just over 24,000 people aged between 35 and 44 filed for bankruptcy in 2009, roughly 30 people per 10,000 population in this age band). However what is really worrying is an underlying trend: bankruptcies have increased steadily among those over 55 since 2000. In fact as the graph below shows, between 2000 and 2009 the bankruptcies have grown fastest amongst those over 65 years of age (by 7 times!) and those aged between 55 and 64 are the second fastest group (with a fivefold increase). It gets even worse amongst older women: bankruptcies have increased by 10 times since 2000.

Not everyone in debt files for bankruptcy or applies for alternatives such as a Debt Relief Order, of course. So, let’s have a look at some data on indebtedness by age.

According to the Consumer Credit Counselling Service, personal debt amongst the over 60s is higher, on average, than for any age group under 45 (Chart 2.7.2.).

Similarly, Citizens Advice Scotland reported that amongst their clients, older people have the highest levels of debt and suffer more ‘debt stress’ than any other age groups.

Furthermore, research by the University of Birmingham for Age UK shows that over 50 per cent of older people who took out an equity release plan defined their financial situation before the plan, and hence the main reason for taking it out, as ‘just about getting by’ or worse. Moreover, 46 per cent used of their housing equity to afford house maintenance and repairs (excluding improvements) and 35 per cent of them used the money to clear out debts.

These findings need be put in the context of the different behaviour patterns towards borrowing and over-indebtedness across the age groups: people aged 50 and over are much more reluctant to borrow money for reasons such as ‘getting the lifestyle they want’ and are more willing to save for something than borrow money to pay for it .

Not surprisingly, then, here at Age UK, we receive many extremely worrying reports of increasing debt among pensioners from local advice services.

Many economic commentators predict that the Bank of England will raise the interest rate sometime this year. The jury is still out on the macroeconomic consequences of such a move, but it will increase interest payments on interest-bearing debts such as mortgages and credit cards. For example, if the Bank of England’s official bank rate goes up to 1 per cent (from 0.5 per cent), we expect a reduction of an additional 2 percentage points in pensioners’ disposable income due to mortgage payments alone.

The loveliest ‘Sweet Auburn’ of Goldsmith may be fictional and idealised. Regrettably, huge indebtedness and insolvency in later life is all too real and far from ideal –as to many older people, a modern-day porter is ominously willing ‘to spurn imploring famine from the gate’.

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