Should I Consider Equity Release For My Retirement?

With inflation for those in retirement reaching record levels and living longer in retirement increasingly likely, equity release schemes could increasingly be at the heart of many people’s retirement plans.

Did you know thatas many as one in six of the total adult population has made no plans for how they intend paying for their retirement? As many as 38 per cent of people due to retire in 2011 have had to cancel retirement plans and delay retirement to continue working. The majority of those delaying retirement wanted to retire at 62 but they now have to work on until they are 68.

“Many people have no idea what their pension is likely to provide until shortly before retirement, at which point it is often too late,” saysRos Altmann, Saga Director General. “If they have not saved and cannot continue working, they need other sources of finance.”

So what are your options if you are unable to work and are struggling with increased costs for everything such as petrol, food and utility charges?

“It’s no surprise that people are increasingly relying on their house to help fund their retirement,” continues Altmann.

“Downsizing and releasing equity from homes is a trend that we predict is likely to continue for many years to come.”

Safe Home Income Plans (SHIP), the equity release provider trade body, claimed that equity release sales increased by 4 per cent in the third quarter of 2010, showing an increase from £196.7 million to £205 million.

The average amount of equity released by those taking up an equity release plan is £46,754.

With the majority of us all able to look forward to living longer than previous generations, how to pay for the extra years in retirement can be worrying, which is why many people opt for independent financial advice to ensure that they are doing the right thing with their money.

But with longer lifespans and less generous private and public pensions, equity release looks likely to play an increasingly large part in the retirement plans of Brits, as people look for help with care, adapting homes for the elderly, as well as for money to help pay for retirement in general.

“Over the past twelve months, we have seen a growing acceptance of equity release as a retirement planning option amongst consumers, advisers and the Government,” says Andrea Rozario, Director General of SHIP, the equity release trade body.

“With longevity increasing and the Government making it clear that the state will not be able to provide all encompassing retirement funding, other options must be considered.”