The stress and strain of managing money is a constant battle for many people across the country. For most of us at least, whilst income from work is flowing in steadily the battle remains somewhat controllable. However, when income from work stops or slows, and we enter retirement, budgeting becomes a fine balance.
What’s more, most people in the UK feel that they are financially underprepared for retirement and only 24% say that they feel fully prepared, according to research from Close Brothers Asset Management.
The research also reveals that only 49% of over 50s believed that had put enough money away to provide themselves with a ‘reasonable standard of living’, come retirement. More worrying still, some one in five said that they had never made any contributions to any pensions saving plan.
Without the funds to pay for an ever-lengthening period of retirement (life expectancy increases are making retirement even more costly), post-work life can quickly become rather miserable. However, thanks to high house price inflation, most UK homeowners have seen their property increase in value over the years and their equity pool swell to such a size it could serve as the financial safety net they may need.
Over the past 40 years or so, the average property in the UK has increased in value by over 1,000%. Despite the odd downturn, the historic trend for house prices has always been up. In 2014, house prices increased by 8.4% across the UK when taken as an average, and in April of this year a new all-time asking price record of £286,133 was set.
With thousands of homeowners struggling to make ends meet and save enough for retirement, the solution to their financial difficulties could be right in front of them: their home. Equity release is one way historic house price gains can be converted into tax-free cash.
Our own research here at Bower has revealed that, in the first quarter of 2015, 14% of our customers accessed their housing wealth to ‘boost inadequate pensions’, up from 6% in the final quarter of 2014. Equity release is fast becoming a widely accepted form of retirement financing, and with the majority of people feeling that they have not saved enough to retire comfortably, more and more people will begin to turn to the cash locked in the bricks and mortar of their home.
Equity release is a serious, long-term commitment, and professional advice is essential. Equity release will reduce the value of your estate, and may affect your entitlement to state benefits.
To discover whether equity release is right for you, contact Bower today.