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Over-55s in Finland increasingly struggle with debt

"Many older people fail to prepare for lower incomes when they retire," says Juha Pantzar from the Guarantee Foundation.

Rahaa ja maksukortteja
Image: Kalevi Rytkölä / Yle

Indebtedness among over-55-year-olds is on the rise, says Juha Pantzar, executive director of the Guarantee Foundation, which helps private individuals solve problems with debt.

Last year, the University of Helsinki published a study on payment defaults, which showed that debt problems among those over 55 years of age had increased during 2013-2016.

Pantzar believes that the situation has worsened since the report was released and expects the trend to continue in the coming years.

”The rise in indebtedness is driven by the popularity of consumer credit, changes in consumer culture and the fact that many older people fail to prepare for lower income when they retire,” Pantzar argues.

According to the study, the average amount of debt carried by people over the age of 55 who are having trouble paying back their loans has increased significantly. In 2013 those payment defaulters owed some 379 euros of debt on average. By 2016 that figure had risen to around 1,300 euros.

Middle-aged people in Finland are not alone in overdebtedness. According to credit data firm Suomen Asiakastieto, nearly 400,000 people - from all age groups - had defaulted on paying their bills, which was a record high.

Cultural change

While the number of Finns over 55 years has grown from 1.6 million in 2007 to 1.9 million in 2017, this does not alone explain the bigger proportion of older people in the default statistics, according to Pantzar.

”For the first time, a generation that is accustomed to spending all they earn is going to retire. If they cannot adjust their spending when their incomes fall by as much as 50 percent, they're in big trouble,” Pantzar says.

The older demographic also commonly helps their adult children financially, which only adds to their debt.

"Many families live on tight budgets or overspend. If things then start to go wrong, it’s natural that relatives try to help," Pantzar notes.

Finally, opportunities for quick loans and consumer credit are plentiful - and people use them.

“Few want to think about retiring and paying back debts when they're 50,” he adds.

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