New Aviva research has found that just 8% of over-55 homeowners who are retired are still paying off their mortgage, compared to 31% of those who are still working.
The average amount spent on housing by over-55 mortgage holders has decreased from £315 per month in 2016 to £295 in 2017, which Aviva has attributed to low interest rates.
According to the report their average mortgage debt is now £68,612, up 14% since last year, which could be linked to an increase in people carrying interest-only mortgage debt into retirement.
The rising cost of living is perceived to be the greatest threat to over-55s' standard of living with over half (54%) stating this is one their most significant concerns, up from 45% this time last year – with working over-55s and the retired almost equally concerned (54% vs. 55%).
Additionally, credit card debt among the over-55s has reached a post credit-crunch high of £1,052, up 9% since last year and the highest level since Aviva began collecting the data in 2011.
When all sources of debt are taken into account (excluding mortgages), over-55s who are still working owe almost twice as much (£2490) as their retired counterparts (£1314). This suggests that servicing and clearing this debt may be a factor in more of this age group continuing to work into later life.
Lindsey Rix, Managing Director, Savings and Retirement at Aviva, said: “A growing number of Britons are prolonging their working lives and our findings suggest that the goal of a debt-free retirement may be one factor behind this. The approach to retirement is ideally a time for saving and careful financial planning, but with the rising cost of living, many people are having to resort to borrowing and still have mortgage repayments to factor into their budgets.
“With widespread speculation that interest rates may rise for the first time in over a decade, this record level of debt is worrying. An increase in the cost of borrowing will undoubtedly create challenging conditions for people to navigate on the approach to retirement.
“People’s financial needs are changing in later life with many now facing the prospect of paying off a mortgage and other debts well into their retirement. The industry must consider these changing needs and start exploring solutions to help address these issues.”