There have been many stories in the press in recent years concerning the more challenging situations people have found themselves in when they retire. Many individuals and couples have planned well for their retirement, investing in pensions and other investment vehicles over many years. Yet many have found the income they were expecting is far lower in reality than the forecasts sometimes suggested it would be.
It should come as no surprise then to learn that equity release has become far more popular in recent months. Indeed, recent figures seem to suggest this trend is only just getting started. There has been significant growth in this sector recently, and the trend looks set to continue throughout 2015 and beyond as well.
What is the main attraction with equity release?
The big challenge when many people retire is finding enough money to cover daily and monthly expenses. Even if a mortgage has been completely paid off, there are still sizeable monthly bills to be paid. Final salary pensions are now about as rare as hen’s teeth, and many pension pots have not bought as comfortable a retirement plan as the owner previously expected.
Since interest on savings is also at an all-time low, equity release is now being looked at by many as a potential way to release more cash to fund those retirement years. The main advantage is that it provides you with an opportunity to release some of the cash that is tied up in your property. Many people don’t want to move or cannot do so for some reason. If downsizing is not an option or is not desired, this can sometimes be a reasonable alternative.
Obviously it is vital to seek independent legal advice prior to deciding to go down this route. It is also essential to read the terms and conditions relating to any equity release agreement, so you are aware of the outcome. This would apply to any financial agreement prior to signing it.
Getting the most from your retirement
For some, the possibility of releasing equity from their property could make all the difference between struggling financially in retirement and having a settled and enjoyable lifestyle. This is a way of obtaining a cash lump-sum that could last for many years, taking the strain out of trying to make ends meet. It will reduce the value of the estate left to anyone after death, but the advantages to the individual considering equity release are clear to see.
The income from equity release will be tax-free and can open up many more possibilities for someone who would otherwise struggle on a low income. Clearly it is vital to do your sums and consider the options prior to choosing equity release. However many have found that this is a practical and logical way to provide the income their pension fell short of providing. To this end, it is more than possible that growth in this sector will continue for the foreseeable future.