Older people must take steps to ensure that they can manage their finances, it has been suggested.

According to Callcredit, those over the age of 55 are increasingly developing problems in handling various demands on their money, whether this involves paying back loans or saving for retirement. Research from the credit report provider also showed that 16 per cent of people in this demographic are “unaware” in a financial sense and cannot define how much they are in the red by. Meanwhile, it appears that more Britons could be set to face financial difficulties as they get older, as the annual retirement confidence index by Alliance Trust shows that just over a quarter (26 per cent) of adults are failing to invest any money in pensions schemes.

Pointing to research conducted by Scottish Widows, the credit report provider indicated that more than 1.5 million of the over-55s claim that they are unable to stop working when they reach retirement age due to a shortfall in pension savings. Meanwhile, those who have retired also appear to be under intense financial pressure as some 1.1 million have an outstanding mortgage, owing an average debt of 38,000 pounds. However, money management problems could be even more pronounced for the one in eight who have at least 50,000 pounds to pay. Meanwhile, about a third of people in this age group have carried over short-term debts – such as credit cards and personal loans – for the last three months, owing an average amount of 5,900 pounds.

Mark Ward, consumer debt expert for Callcredit, said: “The recent case of canoeist John Darwin, 57, is a sad tale of the desperate lengths someone is willing to take to break free of debt. Our own research tells us that 16 per cent of over-55s cannot define their debt levels – it is a sobering reminder about the importance of being responsible when taking on debt and always thinking about how you will repay the money you owe.”

Mr Ward added: “It is essential that people start to borrow more carefully in order to avoid having to owe more than we are able to pay back. Breaking the law, like Darwin, is never the answer to solve overindebtedness, so we must be better aware of how to take control of our financial life.”

People struggling with their debts were advised to be proactive and to get guidance from a professional advisory service. In addition, Britons were urged to obtain a copy of their credit history which could allow them to track exactly how much they owe in loans and other types of debt. Using cash rather than plastic cards was also put forward as a means of helping to get to grips with money management, as doing so could allow consumers to see exactly how much they are spending.

Those looking to get back on their financial feet may wish to consider taking out a debt consolidation loan. In taking out a consolidation loan, consumers may be able to service a number of demands on their spending, freeing up disposable income which then could be saved into pension schemes. Such a loan could be helpful for those who are still struggling to handle their money after borrowing to fund Christmas 2006. A recent study by MoneyExpert showed that 4.4 million adults are still making payments on credit card expenditure from last year’s festive period. Meanwhile, 35 to 44-year-olds are shown to be most likely to suffer from a “financial hangover”.

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