Millions of people hoping to retire debt-free will still be paying off mortgages, credit card bills and loans while drawing their pension, new research reveals.

Only 17 per cent of people approaching retirement expect to owe money when they stop work, but 30 per cent nevertheless find themselves still mired in debt.

The average sum owed is £34,600, but some 19 per cent of retirees have debts of more than £50,000 and almost one in 10 are £100,000 in the red, according to Old Mutual Wealth’s forthcoming Redefining Retirement report.

Stuck in debt: Only 17 per cent of people approaching retirement expect to owe money when they stop work

This found mortgage debt was most common, with 21 per cent of people still paying off their house at retirement - although just 9 per cent expected to be in that position when they were younger. Some 14 per cent of retirees hold credit or store card debt and 6 per cent have unsecured loans.

Old Mutual Wealth's findings were based on a nationally representative YouGov survey in May of people aged 50-75, who were divided up between those working and those who had already retired.

Its report comes as an academic study forecast that up to a third of 60-year-olds will be living in rented accommodation by 2040, after never managing to buy their own home.

Professor Steve Wilcox, of the University of York’s centre for housing policy, said this would have an impact on housing benefit costs because many pensioners would not be able to afford the rent on their pension.

He also pointed out that many current homeowners intend to use the money made on their property to pay for care if necessary in old age, but renters won't have this option so this cost would also fall on the state.

Number crunching: Average sum owed at retirement is £34,600, but some 19 per cent of retirees have debts of more than £50,000 and almost one in 10 are £100,000 in the red (Source: Old Mutual Wealth)

The Old Mutual Wealth research also found that pension freedom reforms in April were giving people the chance to get shot of their debt. The changes have allowed over-55s to access their retirement pots and spend, save or invest them as they wish.

The average sum withdrawn from pension funds by retirees since April is £28,000, and some 19 per cent of retirees have used some of that money to pay off debt, according to the Redefining Retirement report.

'We have become a nation comfortable with debt and this follows many people into retirement,' said Adrian Walker, retirement planning manager at Old Mutual Wealth.

'I imagine most people would hope to be releasing themselves from the shackles of debt before they retire, particularly the debt attached to their home.

This new data shows the harsh reality that many will not be able to release themselves from those ties immediately, as levels of debt are higher than they perhaps imagine.

Money still due: Mortgages are the most common form of debt held at retirement, with 21 per cent of people still paying off their house - although just 9 per cent expected to find themselves in this position

'The new pension rules do give people the option of using some, or all of their pension savings to pay off debt, however the amounts being withdrawn are not enough to cover the average that is owed and there could be a detrimental effect on the amount of longer term income available to these consumers.'

The Old Mutual Wealth survey also discovered that a small but significant number of people approaching retirement have had second thoughts about plunging their lifetime savings into the property market and becoming buy-to-let landlords.

Some 7 per cent of people not yet retired plan to use a buy-to-let property as a source of retirement income, down from 11 per cent in a similar survey last December. This is more in line with the 6 per cent of retired people who said in the survey they already had a buy-to-let property.

The newer research was carried out before the Budget, when Chancellor George Osborne reduced the amount of mortgage interest tax relief landlords can claim from April 2017, a move that is expected to deter some people from entering the buy-to-let market.

Instead, Old Mutual Wealth suggested the change in attitude it had detected towards buy-to-let could be a result of rising house prices making it unachievable to make purchases out of pension pots, or press coverage highlighting the costs of owning a buy-to-let property.

People are also likely to have discovered that they faced a huge tax bill from withdrawing all or a large portion of a pension fund to buy a property - a move that could easily propel you into the higher 40 per cent or even 45 per cent tax bands.

The Redefining Retirement report also found the majority of people aged 50-75 were reluctant to use equity release schemes to unlock money from their homes to pay the bills in old age.

Some 59 per cent said they would not consider doing this, compared with 22 per cent who were open to the option.

Those against gave mixture of reasons, including not thinking equity release would be good value for money, not needing the extra income, not wanting anyone else to have an interest or hold on their home, and preferring to bequeath their property to children and grandchildren.

Among those considering equity release, the overwhelming reason was to help provide an income followed by wanting the money to pay for long-term care.