One in three pensioners are still in debt when they enter retirement, research by Key suggests.

On average retirees with debts owe a total of £17,460 and are likely to take three and a half years to clear this balance.

But one in eight of those in debt expect to be paying it back for the next nine years or more and a third of this group say they will never clear what they owe.

Among those in debt, 48 per cent owe money on credit cards, 31 per cent have an outstanding bank loan and 14 per cent are still repaying a mortgage.

Some of those entering retirement with debt may have been hit with unexpected expenses, but 34 per cent of people only start to make definite plans to retire within twelve months of their intended finish date.

This leaves them little time to clear their outstanding credit. 

On average people take two years and four months to plan their retirement, which would also make it challenging to pay down more than £17,000 in borrowing.

Key chief executive Will Hale says: “With changes to the state pension due to start coming into effect this year, it is vitally important to understand the challenges and aspirations of the ‘retirement class of 2020’.

“Today’s findings suggest that while most people work hard to retire debt-free, this is not the reality for one in three people who need to consider how they can service and repay over £17,000 in borrowing from their retirement nest egg.  

“Even those with generous incomes may find this a stretch and people are taking an average of three-and-a-half years to clear the debts they retired with – at a time when they should be enjoying an active retirement and worrying.”