Tackling your debts

Are you set to retire with debts?

Posted 04 June 2015

Find out which debt solution is right for you

Get started

Answer a few simple questions

See if you are suitable

Understand your next steps

If you’re coming up to retirement age but still have debts, follow our guide.

The last thing you want your retirement to be is stressful, but what if you still have credit cards, loans or even a part of your mortgage to pay off? Should you opt to work longer or try to pay these off before your working life comes to a close?

Well, research* conducted on the behalf of Debt Advisory Centre Scotland, found that almost half of over 55s in the UK are struggling to clear their debts before retirement, with the average amount owed being £4,400. Of those who still have debts, 1 in 14 plan on delaying their retirement so that they can continue to make their repayments.

Clearing your debts before retirement

When you retire it’s likely that you will have a reduced income to rely on (such as your pension and savings), which may mean you have to cut back in certain areas.

If you have outstanding debts, they may start to take up a bigger share of your income and you could find it difficult to make your monthly repayments. That’s why, if you can, it would be advisable to get the majority of your debts out of the way beforehand.




Once you reach the age of 55, you may be able to access a lump sum from your personal or workplace pension. You could use the money that you take out to pay off what you owe. If you think this could be an option for you, speak to your pension provider as they should be able to give you advice on how much of your pension you’ll be able to access tax-free. Or alternatively, you can get guidance from the Pension Wise service set up by the government.


Delay retirement


If you think you’ll struggle to pay back what you owe before you retire, you could always delay your retirement. This may not sound like the perfect scenario, but since the government phased out the default retirement age, you don’t have to stop working once you’ve reached the state pension age, which is currently 62 for women and 65 for men (but both are rising soon).


While you continue to work you could use some of this money to repay your debts and if you have anything left after this, you could top up your pension fund so that you have more to retire on. Your State Pension will increase by 10.4% every full year that you don’t claim it (for more than 5 weeks at least), and if you start making weekly top up contributions of up to £25 (which you will be able to do by this October) you could increase your pension pot bit by bit.




As retirement nears, many people start to think about selling their house and trading down to a smaller place. And although this can help to free up some cash to clear off any lingering debts, not everyone wants to part with their beloved home. So if you’d rather stay put, there are special mortgage products out there that allow retired people to release some of the equity from their home to repay their debts. If this is something you’d consider, seek independent financial advice.


Getting help


If your debts are starting to make you feel stressed or anxious, because you don’t think you’ll be able to pay them off before you retire, then it may be time to seek the advice of a debt expert.


One of our expert advisors here at the Debt Advisory Centre Scotland, will be able to listen to your situation and talk you through the different debt solutions available (of which fees are payable). Taking this first step, could help you get the retirement that you’ve been dreaming of your whole working life!


*RedDot questioned a nationally representative sample of 2,000 adults aged 18 and over between 16th and 20th April, 628 of whom were Scottish residents.

by Christine Walsh

Back to blog home

Did you find this useful? Share it with others!

To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.