It is important for people to plan ahead for retirement and how they will fund the lifestyle that they want to lead. Many people look into ways to boost their retirement income and there are a few different ways that this can be done. One of the most effective ways to do this is with equity release, but statistics show that this is not a particularly common option that people consider.
Using Property Wealth
Key’s “Retirement Class of 2020” research revealed that only 30% of people retiring in 2020 used their property wealth to boost their retirement income. People retiring in 2020 owned homes worth an average of £388,900 and total property wealth of a staggering £142 billion, so it is clear that there is a lot of property wealth that could make a big difference to the amount of money that people have in retirement.
Considerations
Equity release is only considered by 23%, but it is something that every homeowner should consider and it is worth using an equity release calculator to see how much you could receive. The benefits of equity release are that it can free up a huge amount of cash, you do not have to move home and there are often flexible solutions available. Of course, equity release is not for everyone and this usually is due to inheritance – 16% of homeowners want to leave their home to their family.
Downsizing
The main option that people used in 2020 to fund their retirement was downsizing with 46% looking to move into a smaller home. This can work well in some cases, especially if you no longer have need for a large family home. It is not always ideal, though, as moving home can be stressful in later years and it might not be a practical option.
Most Not Happy
Just 40% of property owners say that they are happy with their expected income in retirement, so it is clear that something needs to be done. Using property wealth is something that is certainly exploring because it can work well for some people and there are a lot of misconceptions surrounding how it works and what it means for the future.
Other Options
In addition to this, people should be looking to maximise pension contributions, save as much as they can and look into passive forms of income like investing. This can make a big difference to your retirement fund and help you to lead a more enjoyable lifestyle.
It is always important to plan ahead when it comes to retirement and most will need to find a way to boost their income on top of their pension. Equity release is an option that homeowners should consider and can be a good alternative to downsizing, which is not ideal for many people heading into retirement.