Giving up work does not often coincide with paying off debts, according to financial experts.
Around a third of retired people still had significant debts on the day they stopped working for good, says retirement firm Old Mutual Wealth.
The average amount owed by the retired is £34,500 – but nearly a fifth of retirees were more than £50,000 in the red and 10% were paying off debts of more than £100,000.
The most common debt is a mortgage. The firm revealed 21% had an outstanding property loan, while 14% had run up balances on credit or store cards and 6% had personal unsecured loans.
The firm suggests that a large amount of money drawn down under flexible pension benefits introduced in April 2015 has gone towards paying debts.
Living in the red
The research found many workers approaching retirement were surprised to find out so many had debts when they stopped working, as only 17% expected to owe any money.
Only 9% believed they would have a mortgage and they put their average debts on retirement at £33,500.
The firm feels that the research shows too many people are comfortable living with debt when they should budget to live within their means and save more towards their retirement.
The gap between actual debt and expected debt shows many fail to plan their finances properly in the run up to retirement.
Adrian Walker, retirement planning manager at Old Mutual Wealth, said: “Many people seem happy to let their debt follow them into retirement. This is a shame because they have less money for retirement because they have to pay down their borrowings.
“The study also seems to show that many people approaching retirement may not have planned their finances because they do not know how much debt they are in.”
Walker also explained debt planning was as important as saving for retirement.
“Although people are drawing money from their pensions to pay their debts, it does not seem to be enough to cover the average owed, so this could affect retirement income,” he said.
“Part of retirement planning should include taking professional advice about the best way to handle repaying any debts instead of treating them as separate problems.”