Alice Watson is head of marketing and communications at Canada Life
Retirement is evolving; not only are people living longer than they may have expected, but they may well be working up to, and beyond, their anticipated retirement date too.
With this stage of life now potentially lasting several decades, the reality is that most of us will have to pay for later life care at some stage – whether that be for ourselves or our loved ones.
With recent figures from the Equity Release Council showing that falling ill and having to pay for care is the top priority for those aged 55 and over, we need to help today’s retirees meet these challenges, so they can enjoy the retirement they’ve worked long and hard for.
While the state pension provides support of £168.60 per week, this alone is not enough. Age UK estimates that the cost of care is between £600-800 per week – meaning many of today’s retirees are likely to face a significant shortfall.
With nursing home costs expected to increase almost 18% over the next 10 years, this represents a significant challenge for the ageing population. However, the good news is that the later life lending sector has evolved and is innovating to meet these new social and economic realities.
With over £4trn in net UK property wealth, equity release is allowing over 55s to unlock the wealth stored in their homes to supplement the cost of care in the form of a lump sum.
In fact, our own research found that nearly a quarter (24%) of people who have not yet retired, plan to use equity release to fund their future care needs.
By tapping into their property wealth, people can age in their homes, while accessing cash to fund residential care solutions for themselves or their loved ones.
Similarly, taking out a lifetime mortgage could fund any home improvements or adaptations needed to suit retirees’ evolving needs, such as installing a wet room or a downstairs bathroom, which could be the difference between being able to stay in their own home or move into care.
Alternatively, for those who do need to move into a care home, using a later life buy-to-let mortgage could be an option that would help cover the cost of care fees.
This operates very much like equity release in that the balance doesn’t need to be repaid until a person’s death and there are no affordability checks. However, unlike a traditional lifetime mortgage, the move into care would not trigger repayment.
Ultimately, engagement is key; it’s about getting people to think about their wants and needs in the different stages of retirement.
As an industry, it’s important we make clear that equity release could be a way for people to stay in their homes and boost their retirement income.
There are a growing number of
flexible solutions available to help customers who are looking to release equity from their properties, and advisers are well placed to help them find the product best suited to their specific circumstances.