Retirement should be a time to relax after years of hard work but for many people, debt makes that feel impossible.
We often hear: “How can I manage debt now I’m living on a pension?” The good news is, you still have options. The key is making your income stretch, protecting essentials, and putting the right plan in place.
Why debt feels harder on a pension?
When you’re working, income can go up and down: overtime, bonuses, or even a side job might help cover costs. But once you’re retired, income is usually fixed. That makes every pound count.
According to Age UK, nearly 1 in 5 people over 65 are still paying off credit cards, loans, or mortgages. And with rising living costs, even careful savers are finding their pension doesn’t go as far as expected.
We often see:
- Credit card balances creeping up to cover everyday bills
- Overdrafts used to bridge the gap before pension payments
- Worry about running out of savings too soon
- Adult kids moving back home in later stage of their life due to a ‘life event’
Managing debt on a fixed income: your options
- Debt Management Plan (DMP)
- Rolls all unsecured debts into one affordable monthly payment
- Based on what you can really afford, after essentials
- Creditors are asked to freeze interest and charges
- Flexible if your pension income changes
- Individual Voluntary Arrangement (IVA)
- A legally binding plan, usually 5–6 years
- After this, remaining qualifying debts may be written off
- Protects you from creditor contact and legal action
- If suitable, we’ll prepare your case and pass it to an Insolvency Practitioner partner
- Debt Relief Order (DRO) or Bankruptcy
- For people with very low income, no property, and limited assets
- Clears debts after a set period (12 months for DRO)
- We’ll explain carefully and signpost to a charity or specialist if it’s right
What to watch out for
- A DMP or IVA will affect your credit file for up to 5 years
- Homeowners may be asked to consider equity release in an IVA
- Fees apply to some solutions (we’ll always explain these upfront, clearly and fairly)
- Free debt advice is available from charities such as StepChange and National Debtline
Our message to retirees
Debt on a pension can feel like a heavy weight. But with the right advice, it’s possible to manage it fairly, without giving up dignity or essentials.
