32% of people retiring in 2021 will be doing so in the red, according to new research from equity release adviser Key.

Men are expecting to retire with around 15% more debt (£21,885) than women (£19,068).

Key’s “Retirement Ready 2021” study into the finances and ambitions of people expecting to finish full-time work in 2021 found the average amount owed by people retiring in debt is £3,190 higher than in 2020 when the figure was £17,460.

Key says the debt burden will will take a toll on retirement finances as people predict they will be over three years into retirement before being debt free while worryingly one in nine (11%) do not know when they will be completely clear.

While fewer potential retirees had credit card debt (40% from 48% in 2020) and mortgage borrowing remained stable at 31%, borrowing on all other methods increased. The number using their overdraft has increased (17% from 10% in 2020) as has the proportion relying on family and friends (10% from 8% in 2020).

Use of hire purchase agreements (+2% to 15% in 2021) and bank loans (+1% to 14%) amongst those intend to retire in 2021 also increased.

Will Hale, CEO at Key said: “While it is good to see that we have not seen a sharp rise in the number of potential retirees finishing work with debt, it is concerning to see that the amount owed has increased by more than £3,000 in just 12 months. This seems to suggest that those who are already in debt are finding it harder than ever to repay their borrowing and expect to be three-years into retirement before they can finally wipe the slate clean.

“Unfortunately, trying to repay debt from a fixed income while still maintaining a good standard of living can be extremely difficult and people are likely to struggle to achieve this ambition. Before their borrowing spirals out of control, they need to speak to a specialist later life adviser how will be able to help them make sustainable choices around how they manage what they owe.

”Modern equity release products allow customers to repay capital as well as interest so in the right circumstances they can help people to successfully manage their borrowing.”

Key found that people hoping to retire in the North East are the most likely to retire in debt, with 48% retiring in the red. Yet those in the North East owe one of the lowest amounts of any region, having £8,958 of debt.

This is second only to Yorkshire and the Humber in terms of low average debt, where retirees owe just £6,389. Yorkshire also has one of the lowest proportions of people retiring in debt, with just a quarter retiring in the red.

The biggest average debts are in the East Midlands, at over £35,000, and London, the South East and South West which are all around £25,000.