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Elderly increasingly face debt problems, partly due to corona crisis

At the end of last year, there were 39,975 debtors over the age of 63 who had trouble paying off their loans.

People are increasingly retiring while they still have debt, and many are supplementing their small pensions with additional work. Image: Ismo Pekkarinen / AOP

Financial difficulties have increased for the elderly, prompting an uptick in financial and debt counselling offered by the Guarantee Foundation (Takuusäätiö), the organisation announced on Monday.

"We've received a lot of calls from retirees asking about how to pay off their debt," said Guarantee Foundation project coordinator Maria Rumpunen.

According to the foundation, the coronavirus crisis is at least partly to blame for the situation.

Many recent retirees have been doing gig work or run small-scale businesses, which has provided additional income to their pensions. However, the foundation said, the pandemic has put an end to many of these small businesses and led to financial difficulties.

In addition, people are increasingly retiring while they still have debt.

"The debts have often been taken at a stage in life when people were still in salaried employment. Then they have retired, thinking they will pay off their debt with their extra earnings. Now, when the additional income has decreased, it comes as a surprise that their pension is actually quite small and not necessarily enough to pay off debt," Rumpunen explained.

Debtors increased by the thousands

The worsened financial situation of the elderly has also been reflected in foreclosure statistics among that age group.

At the end of last year, there were 39,975 debtors aged 63 and over in Finland, compared to 33,242 in the previous year. The average debt per debtor was approximately 27,000 euros.

Juhani Toukola from the National Enforcement Authority of Finland (Ulosottolaitos)--the national enforcement agency concerning debt matters--said that pension foreclosures clearly increased more than wage foreclosures did last year, for example.

"This of course means that financial difficulties are also commonplace among older age groups," Toukola said.

Toukala said he thought there were many reasons behind this. The pandemic causing a decrease in gig-work may have had an impact, although financial difficulties are usually reflected in foreclosure statistics later on.

Foreclosure figures did not increase significantly last year, he noted.

"We expect it to be more apparent this year," Toukola said.