Retirement planning should include equity release in this changing economic landscape
Retiring mortgage-free in our early-to-mid 60s today, or in the near future, is no longer a given. Many would-be retirees find themselves in the position of still paying an interest-only mortgage. For many, their pension pots were often expected to yield enough tax free cash to pay off any remaining mortgage debt – but sadly this is not the case.
The demise of the final salary scheme, poor performance of equities over the last few years and the tax changes of 1997, have all contributed to pension pots becoming smaller and the income they buy through annuities, ever diminishing.
What has changed for the better, until very recently, is that property prices have risen dramatically, giving homeowners a valuable asset.
Increasingly, it’s becoming necessary to find new ways of funding retirement, and equity release has become an important tool in the mix.
It seems, therefore, a sensible option to include what is usually the largest asset you have - your home - in retirement planning. And releasing equity from your property could be the passport to greater financial security, and should not be disregarded out-of-hand.
Determine which equity release plan would benefit you best.
Property price rises and falls are historically cyclical and most economists expect that with the continuing shortage of property in the UK and the ongoing desire to own one’s own home, at some stage property prices will recover and return to a rising trend. This is a subject that is a must to be discussed with your financial adviser and taken into account to determine which equity release plan would benefit you best, both now and in the future.
17 November 2008