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Alan Kendrick: Give a boost to your retirement finances
Pensions are designed to last you for the rest of your life, but people are living longer and longer. This means that inflation is eroding the value of your pension.
Pensions are designed to last you for the rest of your life, but people are living longer and longer. This means that inflation is eroding the value of your pension.The average life expectancy is now in the high 80s, and increasing year on year. We have seen in the Press recently that some people are living well past 100 and, in the foreseeable future, this could well become the norm.
It is possible that people could be retired for 30 to 40 years.
Even the current low rates of inflation, when applying for this, many years will significantly reduce the buying power of a pension.
It will become necessary for many people to look for other ways of boosting their finances in retirement.
Equity release is a means by which your house can be used to provide a lump sum, which can be used for any purpose.
Equity release is generally only available to people over the age of 50, but the older you are, the better the deal, because the shorter the time the provider has to wait to be repaid.
Equity release plans have, in the past, had a poor press, but they now contain many safeguards:
The right to remain in the home for the rest of your life.
A "no negative equity guarantee", you will never owe more than the value of the house, so your other assets are not affected.
The lump sum can be used for any reason, such as house improvements, holidays, new car, holiday home purchase, house deposit for younger members of the family etc.
Independent legal advice has to be obtained.
Financial advisors have to acquire specialist qualifications to advise on equity.
It would also be desirable if the equity release provider is a member of SHIP, (most providers are) which is a voluntary body regulating the market.
There are essentially two types of equity release schemes available and this article is not the right place to outline these in more detail.
What both schemes have in common is that capital (equity) is being released from the value of your house.
Assuming this capital is spent, then this reduces your wealth and, therefore, the amount you are able to pass on through the family.
For this reason, ideally the next generation should be advised of what is being planned, so that they do not have unreasonable expectations of their inheritance.
More and more people are considering equity release as a way of ensuring that their retirement is as comfortable as possible.
Equity release is a specialist product and expert advice should be sought. Oakwood Financial Services does have a specialist advisor and you can have an initial meeting, free of charge, to talk you through the possibilities.
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