Money is a topic many Britons feel awkward talking about. A 2019 survey by Lloyds found that 50% of UK adults believe discussing personal money matters is taboo. And certainly, where financial conversations are concerned, debt is among the thornier topics.
Yet, it needn’t be. Taking on debt is not necessarily a bad thing. For some retirees and pension planners, borrowing may be needed in order to gain a quick boost to their retirement income. For example, they might need the money for something urgent, such as emergency house repairs. When managed effectively, debt can be an incredibly useful tool for some.
It is important to differentiate between types of debt: namely, good debt and bad debt.
“Good debt” is usually defined as money owed for things used to generate wealth, such as student loans, mortgages, or a business loan. “Bad debt” usually refers to things like consumer debt that do little to improve one’s financial situation.
That said, it is vital to stay on top of all forms of debt, especially when you are approaching or in retirement.
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Debt can easily spiral out of control and land some retirees in trouble. As such, Britons must overcome the inherent reluctance to discuss it.
Indeed, struggling with debt can often leave people feeling helpless and vulnerable. This can be made worse by the negative connotations that are thrown around when debt is concerned. For some, the word can evoke hurtful stereotypes of someone that has fallen on hard times, is incapable of managing a budget, or tends to spend impulsively.
Looking at debt in these ways is unhelpful and unsympathetic. It neither solves the problem nor considers the possible factors that put a person in that financial situation.
Therefore, maintaining this societal viewpoint can lead to individuals in debt remaining silent about their difficulties. When people hide the true extent of their financial situation, it can put immense pressure on themselves and their loved ones and cause their debt to spiral further.
Taking the right steps
It is always best to tackle debt head-on. Retirees and pension planners must be precise in establishing how much they owe, allowing them to formulate the appropriate means and timelines for making repayments.
Meanwhile, advisers, such as our team of experts at My Pension Expert, are always on hand to lend an ear. Advisers can review your financial situation and offer suitable recommendations when setting up a repayment scheme.
Dealing with debt can be overwhelming, particularly if someone feels that their situation is getting out of hand. These feelings are likely to become more common during the current cost-of-living crisis. As such, it is vital that we break down negative stereotypes and taboos around the subject. And for individuals with debts that are starting to feel uncontrollable, it is crucial that they remain calm and seek advice