When it comes to funding retirement, most people are not happy with just relying on their pension and there are a range of options that people can consider to boost their retirement income that could make a big difference to this important period in their life. Using property wealth can be a great option for some, but it is often not considered and this might be for a few reasons.
Using Equity Release
This was recently explored by Key Advice who researched how people were planning on boosting their retirement income. The research revealed that only 2 in 5 were happy with their expected retirement income but just 30% would consider using property wealth in retirement. Equity release involves obtaining money that is tied up in the house while still living there while making interest payments.
Property Wealth Considerations
Equity release can be beneficial because it can allow you to access a significant amount of money without having to downsize or make any serious changes to your life, but it is also important to note that it is not for everyone and there will be risks attached. So, why aren’t people using property wealth to fund their retirement?
The research revealed that 16% of homeowners want to leave their house to their family with equity release affecting the amount that they will inherit. It is important to note that the type of equity release plan you sign up for will have a big impact on the inheritance you will leave behind, so you should always speak with an equity release specialist to work out the best solution for your needs.
Another reasons is that some people are worried about borrowing money in retirement. 15% of people said that this was why they were not using property wealth to fund retirement, but you must also consider what the alternative is with downsizing being the most common option at 42%. Additionally, drawdown equity release plans can help to keep interest payments down as you only release money as and when you need it.
Potentially Missing Out
Will Hale, CEO of Key Services, explains how people could be missing out by not considering using property wealth:
“With people retiring this year owning homes worth an average of £388,900 and total property wealth of £142 billion there clearly is a lot of wealth that could be used in retirement. Many will not need to use their home as part of retirement planning, but it is worrying if people are not taking property wealth into consideration due to a lack of awareness of the options available to them or as a result of myths or misconceptions about products.”
It is important to think ahead when it comes to retirement and property wealth could be a great way to boost your retirement income.