The amount of money owed by those planning to retire over the course of the next 12 months has fallen for the fourth year in row, according to the latest research by Prudential.

This year’s retirees who still have debts owe an average of £18,800, a fall of £3,000 or 14% from last year and a drop of nearly £20,000 since 2012 when the average amount owed was £38,200. However, despite the continued fall in average debts, Prudential’s unique research into the financial plans and aspirations of people planning to retire in the year ahead – the Class of 2016 – shows that the proportion of retirees in debt remains stubbornly high.

One in five (20%) people planning to retire this year will have outstanding debts – a figure that has remained consistent since 2011. The Prudential study, now in its ninth year, shows that those who are retiring in debt this year expect to take around three-and-a-half years to pay off the money they owe – and debt repayments cost them on average £224 a month. However, 13% expect to take seven years or more to pay off their debts and one in 12 (8%) believe they will never be debt-free.

Women planning to retire this year have seen a big fall in their debts compared with last year – those with debts owe an average of £17,800 which is more than £7,000 lower than in 2015. Male retiree debt is virtually unchanged from last year, averaging £19,600. The biggest source of debt among the Class of 2016 is money owed on credit cards – 51% of those expecting to retire this year with debts owe money on credit cards, while 33% still owe money on their mortgage. Although the proportion of people owing money on their mortgage has dropped steeply, from 43% last year.

Stan Russell, a retirement expert at Prudential, said:

“A drop of £20,000 since 2012 in the average debts of new retirees is really good news. For many people, the switch from working life to retirement will see them getting used to living on a tighter budget and having to repay outstanding debts can only make this transition more difficult. However, despite the encouraging fall in the average debt, the overall proportion of retirees with debts, and the length of time these debts will last into retirement, remain stubbornly high. A consultation with a professional financial adviser in the run up to retirement can help people to their get finances in the best possible shape for when the time comes to give up work.”

The average national retiree debt figure (20%) masks wide regional variations, with people retiring in London or the South West (25%) the most likely to owe money, while those in the North East (7%) are the least likely.