I agree with the others. Pay it off. I think family/friend debt is often taken too lightly. Imagine the compound interest _they_ are missing out on because they lent you money. Would you lend money out on those terms (or be okay with someone saying they would pay you back but never making the effort - then finding out they are investing instead...).
I am particularly sensitive to these types of things because my brother has done this to my parents. They are in their late 60's as well and it is interest they are losing out on that they do need. And it's been probably about 10 years. My parents weren't too concerned the first few years, but when it drags on like this, and the person you lent money to takes a vacation, buys a new car or is bragging about their investments, you start getting bitter pretty quickly. Outside of credit card debt with a high interest rate, I consider this to be the next type of debt that should always be paid off ASAP. Don't assume its a gift - and just because someone says "take your time", they are most likely assuming it is because you can't pay it off...