A third are indebted as they enter retirement
Retirement. That much-awaited time when, after paying off your mortgage and accumulating a pension pot, you stop work and sail off into the sunset to enjoy your twilight years.
Unfortunately, not every retiree’s story matches this ideal. Indeed, far from having everything paid off, it has been reported that nearly a third of those retiring this year will do so in debt1. While the number of people approaching retirement in debt has remained steady (32% this year vs 33% last year), the value of those debts is around a fifth higher than last year’s average, with 2021 retirees owing £20,650 on average. This debt comes from various sources: Credit card debt – 40%, mortgage debt – 31%, overdraft – 17%, borrowing from family and friends – 8%.
IHT receipts soar in 2021
HMRC data2 has revealed that the government collected £5.4bn in Inheritance Tax (IHT) receipts in the 2020-21 tax year – £0.2bn (almost 4%) up on the previous tax year. Typically, more than 20,000 deaths per year result in an IHT charge. There are steps that can be taken to keep an estate out of range of IHT or at least reduce any IHT due upon death.
Triple lock changes for 2022–23
After much speculation, in September, the Secretary of State for Work and Pensions, confirmed suspension of the average earnings component of the pension triple lock, to avoid a disproportionate rise of the State Pension following the pandemic. For the 2022-23 tax year only, the new and basic State Pension will increase by the higher of either 2.5% or the consumer rate of inflation.
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