Don't panic

Of all the things the world could have been startled into panic buying during the Coronavirus pandemic, toilet paper has to be one of the most unfathomable. Across the world, not just in the UK - where, despite our reputation for stiff-upper-lip stoicism, we dial 999 when KFC runs out of chicken - human beings decided that the best thing to run out of room to store anymore of in our homes was a product not routinely associated with the common symptoms of the Covid-19 virus.

Anadin? Sure, I get that. Andrex?!? C'mon.

Whenever we are faced with an unusual or stressful situation that we don't know how to handle, it is not uncommon for humans to make bad decisions, even bizarre ones. Sometimes ANY action feels better than doing nothing. Doing 'something' gives you a feeling of control. Even if you can't really explain the mountain of loo roll you have in your spare bedroom, you do at least have a spare bedroom full of loo roll and THAT'S the main thing.

But it takes a calm head and a steady nerve to pause, step back and look at the bigger picture.

Reading through the latest Later Life Borrowing report from more2life, there's also an undertone of panic amongst the headlines. Astonishingly, a quarter of people aged 55+ are borrowing to make ends meet and 1 in 3 expect to accrue debt in the next 12 months just to meet everyday living costs.

Credit card debt in particular is of concern, with at least ￡4bn of new credit card debt being racked up by the end of 2022 in this age group, a rise of 10% on current levels.

Now borrowing money on a credit card is not necessarily a Bad Thing - if it's short-term, is a relatively small amount and is paid off in full it can be perfectly fine. And you may have a 0% interest deal on a card, for example, that makes borrowing that way very cost effective - certainly cheaper than going overdrawn or taking out a personal loan.

But the report shows that 1 in 5 people with credit card debt over the last 5 years have not paid this off in full, and with unsecured borrowing set to climb to ￡38bn by 2031 (with total borrowing of around ￡322bn when secured debt is added to the total), the picture emerging is one of a degree of potentially bad decision-making by people startled into action as a result of a sudden downturn in their post-retirement finances.

This is where the calm head and steady nerve of a specialist adviser comes in.

There are now a myriad later life lending options available to those aged 55+ and borrowing options that can be far more flexible and cost-effective than unsecured debt like credit cards and personal loans.

Indeed, one of the consistent themes emerging from the equity release market throughout the Covid period is that housing wealth has become a vital source of debt mitigation as people have repaid existing mortgages, credit card debt and other loans with an equity release loan.

Whatever the money is being used for, specialist advice is the key to a great customer outcome and it underlines how important it is that we continue to push as an industry towards ensuring later life borrowing becomes a mainstream thread of holistic retirement planning.

Ultimately, racking up unsecured borrowing debt in retirement is a bit like stocking up on loo roll during a Covid pandemic: it might feel like you're doing 'something' and there's a degree of short-term comfort in knowing you've got something to fall back on. But in the long-run, all you've done is spent unnecessary money on a product that doesn't really solve the issue you were facing in the first place.

Don't panic. Get expert advice.