Inflation may have risen from 3.4% to 3.7% in April, but for those in or nearing retirement who spend a larger proportion of their disposable income in areas where costs have risen far more dramatically, they are facing a figure more like 5%.
The Alliance Trust Research Centre conducted the research and came up with the 5% figure based on the premise that 50-65 year olds spend relatively more of their disposable income on transport, and it is in this sector that prices are increasing rapidly at a rate of 11% per year. Petrol alone has risen by 25% in just the past year.
Combine this with the fact that increasing numbers are entering retirement with a mortgage but without sufficient savings or pension income, and the outcome equals a rising expectation of continuing to work up to and beyond the age of 70 in order to maintain a sufficient level of disposable income.
What about the Retirement Dream?
So what of the retirement dream? Holidays; spending quality time with grandchildren; improving the home; making the most of leisure time? Geoff Charles of Equity Release specialists Bower feels strongly that this dream should not be dismissed wherever possible.
He says, ‘If a property is owned, why not put the value locked into it to good use? Older homeowners could be sitting on enough equity to be able to release some of it to spend on whatever it is they dreamed of doing in retirement. Equity release can be used to pay off a mortgage and increase disposable income, or utilised as a funding option for home improvements, holidays or basically anything that is desired.’
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. Bower offers a no obligation initial consultation to homeowners considering equity release.