Endowment cash could help pre-retirees with their debt

Publication date | 11/02/2010

Britons who are approaching retirement age may be concerned that their high levels of debt mean they have to stay in the workforce longer than desired.

A new study by Aviva has revealed that individuals aged between 55-64 have the lowest level of savings and the burden of debt could be one reason why Britons in this age group are unable to put as much to one side as preferred.

Chris Radford, chief executive officer of aap, said some of its customers had decided to ask the firm to buy their underperforming endowment policies so that they could raise the cash required to make headway into their debt.

Older Britons still struggling with debt

The survey by Aviva discovered that 29 per cent of pre-retirees have savings of less than £500, which drops to 20 per cent for those who are retiring and 16 per cent for those who are long-term retired.

Such low savings could be a result of having to use a large proportion of an income to clear credit and store card balances, as well as personal loan repayments.

Despite retirement looming, 40 per cent of those approaching the age to leave the workforce save nothing every month.

Aviva suggested that a relaxed attitude towards debt among the baby boomer generation is one reason why those over the age of 55 often have such financial commitments to meet.

Clive Bolton, at-retirement director for Aviva Life, said: "Although we would strongly advise people to start saving for their retirement as early as possible, we also need to ensure that those approaching retirement have access to the right information and support to maximise their income in their later years."

aap could buy your endowment policy to help you with debt

Mr Radford, from aap, said some of its customers had decided that rather than surrendering endowments back to their insurance company, they would instead sell their unwanted endowment policies to aap to raise money to help clear debt for a more comfortable retirement.

He added that should aap make an offer to purchase an endowment policy, it will always pay more than the surrender value offered by the insurance company.

Reasons to sell your endowment policy