Millions of people’s finances have been affected dramatically by the virus, and many who are approaching retirement have seen the value of their pension pots plummet in value in recent weeks.
More than one in four (26%) of workers over the age of 50 have either been furloughed or have had to accept a pay cut since the pandemic began, according to research by Legal & General Retail Retirement. Of these 38% say they expect they’ll have to work indefinitely as a result.
Chris Knight, CEO of Legal & General Retail Retirement said: “Those who feel like they might be forced to delay their retirement should make sure they’ve gone through the process of getting a comprehensive understanding of their total savings. Many people may have more saved than they anticipate in the form of forgotten pots from previous employment.
“In addition to pension savings, it’s also worth looking at a broad range of retirement products to get a holistic understanding of what you can utilise to fund your retirement. Equity release, for instance, can be a useful tool for people who have significant property wealth that they might benefit from taking advantage of.”
According to retirement specialists Key Retirement’s latest market monitor report, the number of retired homeowners accessing the wealth in their property via equity release increased in the first three months of the year – although homeowners released smaller sums than they have in previous months. Separate figures from the Equity Release Council, the trade body for the equity release sector show that £1.06bn of property wealth was accessed via equity release products in the first three months of the year, up 14% from £936m during the same period last year.
Will Hale, chief executive at Key, said: “Following a year of political and economic uncertainty the equity release market started well in 2020 and has proved remarkably resilient given the unprecedented circumstances the UK and the world finds itself in. Consumers are more cautious and while we are finding an increased number of people using equity release, they are taking out less and using more drawdown products to help future proof their later life finances whilst mitigating the impact of roll-up interest.”
Equity release rates are currently competitive. For example, earlier this month lifetime mortgage provider Responsible Lending introduced a lifetime mortgage interest rate of 2.51%. The minimum loan amount is £10,000 and customers can repay up to 10% of their loan each year without incurring early redemption penalties. There is a wide range of equity release deals to choose from, so it’s a good idea to seek advice from an equity release broker if you’re considering this option.
Rachel Springall, finance expert at financial website Moneyfacts.co.uk, said: “It is important to point out that the best equity release plan for consumers will depend on the amount they can borrow, a plan’s flexibility, an applicant’s age, fees and not just on the interest charged. Therefore, seeking independent financial advice is a must.”