The over-55 age group is expected to have £236bn in debt by 2021, an increase from £226bn in 2020, according to more2life.

This increase is expected due to optimism among older generations as the UK’s economy recovers from the pandemic, and spending on ‘big ticket’ items such as cars, mortgages and home renovations returns.

The research also shows that 76% of the overall debt level in 2021 will be driven by those aged between 55 and 64, who are expected to borrow £180bn by the end of this year, a rise of £9bn since 2020.

Today’s figures contrast with more2life’s research last year, which suggested that debt amongst over-55s would fall to £207bn in 2021 as lack of consumer confidence caused people to delay purchases and tighten their belts.

More than a quarter (27%) of over-55s say their general financial situation has worsened since March 2020, with the employed hit harder than the retired.

Among part-time workers, 43% said they had seen their financial circumstances worsen compared to 15% who said their situation had improved.

Figures from the Office for National Statistics (ONS) revealed that 28% of furloughed employees in the UK are aged 50 and over, and this cohort were more likely to report working fewer hours than usual because of COVID-19 between December 2020 and February 20211.

Conversely, 17% of over-55s said their general financial situation had improved since the start of the pandemic.

Retired individuals were most likely to say this compared to those who said their circumstances had worsened (20% vs 14%).

The primary reason over-55s gave for an improved financial position was a drop in spending, with 68% of respondents agreeing this was the key factor.

Dave Harris, chief executive at more2life, said: “There’s no doubt that the events of the last 15 months have been both unexpected and challenging for most of us.

“And the older generations are no exception, with more than a quarter of over-55s saying they have seen their financial position deteriorate due to the pandemic.

“However, as our research shows, older customers are also relatively optimistic about the UK economy’s recovery, with discretionary and ‘big ticket’ spending set to rise.

“As a result, borrowing among over-55s is expected to increase to higher levels than previously forecasted.

“Yet, despite this confidence, there is no doubt that that some over-55s are or will struggle as furlough ends and life returns to a more normal pattern.

“Our research suggests that they may find themselves turning to short-term forms of debt, such as credit cards, over the next year.

“With the potential for this borrowing to grow to unmanageable levels, it is important they are made aware of all of their options.

“There are a range of products on offer in the later life lending market, meaning that consumers with varying needs can find an approach that enables them to manage their borrowing and enjoy a more comfortable retirement.

“However, it’s crucial they seek advice that helps them to make the right choice for their unique circumstance, whether this involves equity release or an alternative solution.”