Equity release could dig out retirees with ostrich-syndrome
Pottering in the garden, spending time with the grandkids; these are just some of the activities we can look forward to in retirement. Others, of the more expensive variety, include nice holidays, home improvements, maybe even purchasing a caravan or new car.
However recent figures suggest many people will not have such a rose tinted retirement.
There has been much talk surrounding the rising number of retirees who are approaching their golden years with trepidation, fully aware of their poor pension provisions and depleted savings.
However there are a number of people who are oblivious of the potential financial pitfall soon to be upon them; a group of people who, having made regular contributions to their pension(s), have fallen foul of ‘retirement complacency’.
According to a survey by Duncan Lawrie Private Bank, over 50% of people who have been paying into a private pension have either never reviewed it (38%) or have not done so in the past three years (14%).
In addition to this nearly half of respondents admitted they have never checked their pension pot while 9% of people in the UK can’t even recall the number of pensions they actually have.
Head out of the sand
Such complacency could result in a nasty shock for many future retirees, with some perhaps forced to remain in work, downsize their property or take out an equity release plan as Richard Espley, Head of Equity Release at Goldsmith Williams, explains:
“When it comes to pensions many people believe that as long as they have one, they’re on track for a comfortable retirement. However waning annuity rates means pensions are simply not performing as well as they used to.
“While many are aware of their financial affairs, these figures show there is a large number who, with retirement imminent, will suddenly find themselves with a far smaller pot to ‘play’ with. These people may have to face the prospect of continuing to work or even moving to a smaller property.
“Equity release is another option available to older homeowners. It allows them to release some of the equity from their property as either a lump sum or in smaller, more regular payments.
“With recent figures highlighting the gulf between rising house prices and the average retirement income, equity release could offer a viable financial solution and soften the blow of what’s to come.”
Content correct at time of publication