The over-55s are expected to have £207bn in debt by 2021, which is a drop from £226bn in 2019, according to research from equity release lender more2life and economics consultancy Cebr.

This demographic is expected to borrow £19bn less over the next two years as a result of the coronavirus crisis, with the older generation being increasingly cautious amid economic uncertainty.

However, as the economy recovers and consumer appetite for borrowing returns, more2life forecasted that borrowing levels will rise after 2021, ultimately reaching £300bn by 2030.

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This would see the total amount of debt owed by the over-55s increase by almost half (42%) in 10 years when compared to 2020 levels (£211bn).

Households aged 55-64 are expected to owe an average of £94,173, including mortgage repayments, in 2021, compared to £106,552 in 2019.

Households aged 75 and over that still hold mortgage debt will also see their total debt level fall from £67,007 in 2019 to £58,975 by 2021.

Figures from the Office for National Statistics2 (ONS) showed that households have been able to save an average of £182 per week during lockdown, with those aged between 65 and 74 having been able to save an extra £83 per week compared to those below the age of 30.

Nine in 10 (89%) people who are saving for retirement or currently retired have seen the value of their pension pot fall by an average of 15.2% in the first quarter of 2020; 30% of those aged 60-64 who are still working are now earning less than they did prior to the outbreak.

Three in 10 (30%) respondents aged 54 and over think that the pandemic will impact them financially and increase their debt, with 33% of respondents in full-time employment and 40% in a part-time job believing the outbreak would raise their debt levels.

Dave Harris, chief executive officer at more2life, said: “The coronavirus pandemic is having a huge impact on the way over-55s spend their money.

“The nationwide lockdown, coupled with the heightened economic uncertainty, has caused many retirees to become more cautious and rein in their spending on larger or discretionary goods.

“However, although we are expecting to see a short-term fall in borrowing by the over-55s, it is clear that this will not be a lasting trend.

“Almost a third of this demographic will experience a hit on their finances and are expecting their debt to rise as a direct result of the pandemic.

“For those who are impacted financially and need to draw on extra funds, it is crucial that they are made aware of the solutions that can help them bridge this income gap.

“As debt among older generations rises, it will be vital that they understand how housing equity can help navigate and manage their various financial obligations in retirement.

“The variety of products now on offer in the later life lending market means that consumers with varying needs are able to find the right option that is suited to their circumstances and ensure that they are able to enjoy a more comfortable retirement.”

Diane Watson, founder of She Can Prosper, said: “The coronavirus pandemic has had a huge impact on our society, but the true economic consequences of the crisis are only now beginning to be felt.

“Whilst today’s research shows a short-term fall in debt among the over-55s, many people in this demographic will see the value of their pension savings fall which will have a massive effect on their financial wellbeing.

“Indeed, with debt levels among retirees forecasted to reach £300bn within 10 years, it’s clear that these individuals will increasingly need to turn to the borrowing options available to help boost their retirement income.

“Today’s retirees face greater financial pressures and longer life spans than the generations that came before them, making it vital for them to plan for later life adequately so that they can enjoy the retirement they deserve.”