It has been reported by Axa Wealth that rising numbers of people approaching retirement are having to look to their families to help them supplement their incomes. As many as 10% of those aged 55+ are apparently in this situation.
On the other hand, another study from the Skipton Building Society suggests that we are at our most wealthy when reaching our late fifties and early sixties. Despite this, recent research from LV= indicates that during the first five years of retirement, people spend and deplete a major share of these savings and investments on non- essential items like holidays and entertainment. As a consequence, perhaps astonishingly, over 40% of those of us six years or more into our retirement are applying for credit cards and loans to maintain the lifestyle to which we have become accustomed since retiring.
The three surveys mentioned suggest that serious advance planning and budgeting is not undertaken by a large proportion of those at or in retirement. Although traditionally pension incomes have been lower than employment earnings, the reality is that financial pressures can increase, not diminish, after retirement because sufficient money is needed to enable people to occupy themselves every day of the week rather than just at the weekends.
The above scenario explains very much the growth which is now taking place in the Equity Release market sector. With a rebounding property market, many retirees have become more confident about making use of the equity tied up in their homes. A Lifetime Mortgage is often the most effective way of paying off short term borrowings taken out in the early retirement years. Equity Release Plans also enable elderly people to fund the purchase of important one off items (e.g. a car), and to supplement their pension incomes in the years ahead.
Bower’s team of specialist Equity Release advisers can explain how Equity Release Plans can be used to help people prepare for the financial demands of retirement. Lifetime Mortgages and Home Reversion Plans are increasingly perceived as mainstream retirement products, particularly if they have the protections associated with the Equity Release Council standards. Being independent financial advisers, Bower have access to the various Plans which are available from the wide range of Providers now offering Equity Release Plans.