legal & fi nancial
The role of equity release
With increasing lifespans, people are enjoying a longer period of retirement – so how can equity release help with this fi nancial impact?
T
here is a changing attitude towards retirement as people can now look forward to an increasing lifespan. Indeed,
people are now spending much longer in retirement than used to be the situation a couple of decades ago; now, for some, it can be as much as 30 years.
The population of the UK is ageing
according to the Offi ce of National Statistics. The number of over 65s has grown by 1.7 million people since 1935 and is predicted to reach 23% of the total population by 2035. Those reaching retirement today
aspire to a life of activity and comfort, and want to continue to afford regular holidays and enjoy life to the full. However, recent research has identifi ed that one in four people are now reaching retirement with outstanding debts. This
Planning For Later Life Magazine
fact has been confi rmed by another recent research study, undertaken by the University of Birmingham and sponsored by the charity, Age UK (merger of Age Concern and Help the Aged), which identifi ed that 12.5% of homeowners, aged between 65 and 74 years, continue to make monthly mortgage payments from their retirement income. For some, these mortgage payments
are on an “interest only” basis and, therefore, will continue until such time as the loan is redeemed – possibly not until the home is sold for probate purposes. Additionally, it is the older workers who have been the biggest victims of the recent recession. The number of over-50s who have been out of work for more than 12 months is now at its highest fi gure in a decade, according to the charity Age UK. This legion of would-be
workers may struggle to fi nd a full-time job ever again and can expect the coming decades to be characterised by a battle to cover essential household bills. For some people, their home
represents their major capital investment and, as they grow older, they fi nd themselves having a valuable asset on the one hand and a restricted income on the other. This results in many people approaching retirement with a quandary – aspirations in excess of retirement income.
Downsizing may seem appealing in the hope of saving money, but the upheaval of moving home could outweigh any benefi ts. Emotional stress has to be another consideration as links with friends and social activities would be broken. Whilst letting a room in the family home could be another way to
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