With rises in the state pension age planned in the next 15
years, many people are presented with dilemma - work longer than
they had planned, or retire and face a gap in retirement
While many people will have had 60 or 65 in mind as the age they
will retire at depending on their gender, the state pension age
will equalise and rise to 66 in 2020 and 67 in 2028. Our research
found that more than half of people still plan to retire before the
age of 66 and that the older people are, the more likely they are
to say this. These older people are therefore likely to face a
shortfall in their retirement income as they will not receive their
state pension at the age they plan to retire.
Those in the 'baby boomer' generation are most likely to say
they will retire before the age of 66 so are most likely to face a
shortfall. These are also the people who have the least time to
adjust the amount they are saving to cover any shortfall.
When asked how they plan to cover this shortfall, some said they
would rely on their private pension, some will work part time and
some will use non-pension savings.
However, a quarter of people admit they have no idea how they
will cover this.
The good news for these people is they may be literally sitting
on the answer. Baby boomers who profited from cheap housing and
easily available mortgages now often have a large amount of wealth
in their property. Equity release allows homeowners over the age of
55 to access this without having to sell their home.
Even releasing a small proportion of the equity
in their property could cover this shortfall between retiring and
receiving the state pension age. The cash can be accessed as a
lump-sum or in regular payments and any interest is rolled up in
the sale of the house after the owner dies or goes into care.
There are other options of course such as
downsizing, working part time (which 14% of people plan to do), or
using non-pension savings but equity release should be considered
alongside these as one possible option and a conversation with a
specialist financial adviser and solicitor should be the first port
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