Millions of retirees are still in debt in one way or another in retirement, and many are still paying off their mortgages.

Around 3.3 million retirees have debt to pay off, with each person owing an average of £17,000, according to a survey by life insurer SunLife.

From credit cards to loans, the combined outstanding balance of these debts stands at £58 billion.

It also becomes it is increasingly common for retirees to pay off their mortgage in what are supposed to be their golden years.

At least half a million, or 5 per cent, of these retirees still have not repaid their mortgage, with the average mortgage debt standing at £63,644 per person.

The number of people who are still repaying their mortgage in retirement has increased.

Data from UK banking body UK Finance shows 32,990 new home loans were issued to older borrowers aged over 55 in the second quarter of 2024, up 8.34% annually.

Despite this, by far the most common debt among retirees is credit card debt, SunLife found, with 25 per cent of people owing an average of £3,566.

Mark Screeton, CEO of SunLife, said the cost of living and the rising cost of debt still has a “huge impact” on retirees’ personal finances.

It comes just months after the Chancellor announced she removal of winter fuel payment – worth £200-300 – to millions of pensioners.

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The fund is now only available to those of receipt of pension credit or some other means-tested benefits, but access to pension credit remains a problem.

While around 1.4 million pensioners already benefit from pension credit, it is estimated that up to 880,000 households eligible for this support have not yet applied, according to the Department for Work and Pensions ( DWP).

In August, the DWP launched an awareness campaign to encourage eligible pensioners to apply.

At the time, Rachel Reeves said: “The dire state of public finances that we inherited from the previous government means that we have had to make some very difficult decisions.

“Our commitment to supporting retirees remains, which is why we are maintaining the triple lockdown.

“We want retirees to get the support they are entitled to. This is why I urge all retirees to check whether they are entitled to pension credit.”

However, many will still feel mistreated as they continue to pay their mortgage in retirement, on top of other bills.

On average, retirees spend £602 a month paying off debt, according to SunLife. This equates to £7,226 a year, around a quarter of the average annual income of a retired household aged over 50.

Personal loans and car finance accounted for 6 and 8 per cent of loans respectively among retirees, with retirees aged over 50 owing an average of £6,918 for personal loans and £12,582 for car finance.

For those struggling to repay their mortgage, equity release could be considered as an option.

This allows homeowners over the age of 55 to tap into the value of their home in retirement by taking out a forgivable loan when they sell their home after their death, which could help them pay off their debts.

However, this should be treated with caution, as the interest charged accumulates over time and can end up being substantial.

Mr Screeton said: “Of course, equity release is not suitable for everyone, so it is best to speak to a financial advisor to find out more about the options available to you and your circumstances specific. »

There’s no need to make monthly payments, but freeing up equity leaves your loved ones with less of an inheritance. So it may be worth considering other ways to increase your income if that’s a concern for you, he advised, such as downsizing. .