The middle aged and elderly are set to become the most indebted age group in the next few years.
New research by CCCS has revealed that middle aged and elderly couples are set to be increasingly affected by personal debt over the next few years.
The research is contained in a report entitled CCCS Consumer Debt and Money Report Q4 2011 (PDF). The report predicts that clients aged 45+ seeking debt help from us will almost double from a 28% in January 2005 to 47.6% by December 2014.
The figures suggest that requests for debt advice will reach a peak in 2014, based on a rising problem in the jobs market, a rise in interest rates and the possibility of further problems in Europe. These combined issues could lead to a catastrophe for many of a new, older debt generation.
Talking about my generation
Currently the ‘debt generation’ is within the 31-45 year old age group. They call us more than any other age group, driven partly by over-extension in the housing market and the fallout from cheap credit in the past.
However, the predicted rise of the 45+ debt generation is set to be a significant change for a generation that has seen massive changes in the UK’s economic outlook.
In the early 2000s the average house price was £85,000. By December 2011 the average house price was £165,000. For those who bought a property 10, 20 or 30 years ago, the equity boom may have given some of them a false sense of security about their finances.
Many of the current ‘debt generation’ are home owners, feeling a sense of stability due to the growing equity in their property. Many felt that should the worst come to the worst this equity could be realised.
The age of easy credit
This generation has also lived through an era of easily available credit, cleared by falling back on equity in their property, via remortgaging. Many have done this more than once, living beyond their means but escaping the consequences thanks to the rising price of property.
They are now facing over-commitment on credit, a collapsing job market, a stagnant housing market and historic low rates of interest on savings (if they have any).
To be fair, the low rates may have been a temporary plus factor for many owning property, especially using a variable rate mortgage to take advantage of lower mortgage payments. Some will even be repaying expensive unsecured debt during this period.
We have seen the average level of debt reported to us drop over the last few years, and we expect this trend to continue while the base rate remains low. However, our research suggests that the need for debt advice, particularly for this generation, will soon reach its peak.
The “debt noose”
While the future may look bleak, it’s worth considering that some people seeking debt help have known about the problem for a lengthy period of time before making the decision to ask for assistance. Our advice is to make sure you don’t wait for the debt noose to tighten.
The quicker you reach for help, the more solutions could be available to you. Ignoring the problem now could mean you could be one of the many who contact us in 2014.
The first and most important thing to do is put together a budget based on your circumstances now and then look at possible future scenarios. If a sudden rise in interest rates is going to leave you short, don’t bury your head in the sand. Instead try taking some confidential advice from us
Changes that are likely to happen in the future are important to consider in the here and now.
Job loss and redundancy is becoming more and more common - do you have an emergency fund to compensate for this? If not, do you have any insurance products to cover this eventuality? These are all questions worth asking yourself.
If you fear your future may be compromised by debt problems we’d recommend that you use our online counselling service CCCS Debt Remedy as soon as possible. You’ll get free, impartial and instant advice and it could help you avoid becoming one of the statistics later on.