Does debt have an impact on retirement?

Retirement is something that all of us will have to think about at some point - and if you have debt, especially problem debt, it might impact how you approach retirement.

In fact, new research that we conducted here at Lowell suggests that more than 1 in 6 of the Brits that we spoke with, would consider delaying retirement for five years due to their debt.

Both debt and retirement can be daunting for many Brits, especially if finances have been tight in the past. To find out more about financial worries and the impact that problem debt can have on retirement, we conducted a survey to find out how people in the UK feel about their pension and retiring in the future.

Some people consider delaying retirement because of debt

Our research revealed that over one in six (17%) Brits who are delaying retirement are doing so for at least five years, and one in eight (12%) are delaying it for at least 10 years.[1]

We know that anyone can struggle with debt and we wanted to get insight into how debt affects our customers, so we spoke to our Lowell Customer Panel. This revealed that 41% of Lowell customers over 45 felt their biggest concern was retiring while still in debt, in case their pension wasn't enough to live on and settle their debts.

Almost a third of the customers we surveyed (31%) aged over 45 said they have considered or are actively delaying their retirement due to worries about debt, proving that debt can have a serious impact on financial life planning.

Unfortunately, 9% of Lowell customers aged over 45 (that we surveyed) also felt that they might not be able to retire.[2] At Lowell, we understand that being in debt can be really difficult, and you might even feel the same way about your retirement. If you're feeling that way, know that you're not alone in having concerns about the future. We're here to help and working with Lowell might help you to clear your debt with us faster.

If you're a Lowell customer, and you're concerned that your debt might have an impact on your future, contact Lowell to talk through your concerns, and find out how we work with our customers to help you clear your debt with us in a way that's easy and affordable.

Almost a third of customers we surveyed (31%) aged over 45 said they have considered - or are actively delaying - their retirement due to worries about debt

Is a pension enough to live on?

One of the biggest concerns for people is being able to live on their pension - more than one in five (21%) of the Brits we surveyed were worried that a pension is not enough to live on. 

The full basic State Pension in the UK is £137.60 per week for people born before 1953, and £179.60 per week for people born after, but the amount you receive depends on your National Insurance record.[3]

According to research by The Express, to enjoy the minimum retirement living standard in 2021, a single person needs around £10,900 per year, while the full basic new State Pension works out at £9,339 a year [4] - so if you're relying on just having a State Pension when you retire, you might find that your finances are stretched.

With these kinds of worrying statistics in the media, perhaps it's not a surprise that 8% of Brits are also worried about getting into debt after retirement because they're concerned that their pension might not be enough to live on. 

A further 6% of Brits worry that they are not going to be able to support their family from their pension alone, and the same amount worry that they will not know how much of their pension they are going to be paid until they reach retirement age. If you're worried about budgeting once you retire if you still have problem debt, our free budget calculator is a helpful tool to plan out your finances. You can also check your State Pension forecast - including how much you could get, when you can get it and how you may be able to increase it.[5] 

More than one in five (21%) of the Brits we surveyed were worried that a pension is not enough to live on

Pension misconceptions

It's natural to have some worries about your retirement, but there are plenty of common misconceptions you might have about how retirement works, and how it works with debt.

One misconception around pensions is illustrated by the figure of 18% of Brits who believe that your state and workplace pension disappear when you die. Following a death, a sum worth up to 2-4 times your salary will be paid tax-free to your beneficiaries. If a Brit has already hit the retirement age before they die, a percentage of their pension will continue to be paid at a reduced rate to their next of kin.[6]

13% of Brits also believe that you have to apply for a workplace pension, but the regulations have changed to mean that all employers must provide a workplace pension scheme, or 'automatic enrolment' if you meet certain conditions.[7]

Other misconceptions that our research revealed include:

  • 13% of Brits believe you must apply for a workplace pension - if you meet the requirements for the new State Pension, you'll be auto-enrolled.[8]
  • 12% of the people we surveyed believe you can access your State Pension early - the earliest you can get your State Pension is once you reach State Pension age.
  • 11% of Brits believe that you can only retire once you hit 65. In fact, the age at which you retire will depend on your National Insurance record and your age on 6th April 2016, which decides if you qualify for the new State Pension - find out more at

If you're a Lowell customer and you've got any questions about retiring while you're still dealing with debt, get in touch with Lowell to see how we can help. We always put our customers first, with resources like our debt information hub and access to our help and support. For more research into the impact of debt and finances, check out the rest of the Lowell blog.

Published by Libby Davies on 7th April, 2022

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