Millions of workers throughout the UK will have to wait until they are 68 years of age to claim their state pension as moves to increase the pension age are set to hasten significantly in coming months.
It is believed that by 2038 (a full eight years earlier than the initial Labour Party plans) the age at which workers will receive their state pension will stand at 68. Worse still, it is believed that government ministers are even looking into the possibility of this age increasing to 70 for future generations.
The current pension age for men has remained at 65 years of age since its introduction shortly after the Second World War. With life expectancy increasing significantly since the 1940s, ministers say that keeping the retirement age at 65 is unaffordable.
It will also be announced that the default retirement age is to be scrapped, meaning it will be illegal for employers to force people to stop working at the age of 65. This means it is possible for those wishing to do so to continue to work well into their 70s or 80s if they wish.
What if you don’t want to work past 65?
Having to wait longer before being able to claim a state pension may leave many bitter that their retirement dreams seem to have drifted further into the distance. Not everyone will want to continue working into their late 60s or 70s and would rather stop altogether or at least reduce their hours. However, bills will still need to be paid and that retirement dream may well be unaffordable without an income from a job or a pension.
A solution? For homeowners over 55 that could be an equity release scheme. A lifetime mortgage or home reversion plan could well provide a supplement to a reduced wage or an income or cash lump sum to live on whilst waiting to qualify for a pension, or even to boost a pension when the time comes to draw it.
Increasing choice on the Equity Release market
Releasing value from a property is safe — providing a SHIP equity release plan is used, or one with the same guarantees. Homeowners have the peace of mind of knowing they will be able to stay in their property for life and will never owe more than it is worth.
There is increasing choice once again on the equity release market, so contact an equity release specialist for independent advice.
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration.
Bower is an FCA regulated independent financial advice company that offers specialist advice on equity release throughout the UK. For more information email [email protected] or call 0800 4118668.