A third of over 55s worried about retirement finances
8 December 2020
Not enough money to live on in retirement
The money we save during our working life is meant to see us through our retirement, but unfortunately, many over-55s in the UK are worried that they simply won’t have enough to live on comfortably and to meet future costs, such as care fees, according to a recent report by the Equity Release Council.
The report highlighted that financial concerns in retirement were particularly high amongst women who are still working, with 48% of them stating that they have concerns that they might run out of money, with ‘less than half women stating that they were confident that they will be able to afford to choose when they retire’. Working men of the same age men share similar concerns over their finances in retirement, with 32% believing that they might run out of money – up from 23% last year.
Why are over-55s worried about retiring?
The report also demonstrated that there were a number of key concerns which were affecting the confidence among homeowners aged over 55 in the UK about when they can retire, and how comfortable that retirement will be, including:
- The cost of care
- Running out of money
- Uncertainty over how much money they need to retire
- Concerns that they’ll have to sell their home
Why are over-55s worried about running out of money in retirement?
Fears over not having enough money to see you through your later life is a real concern for those close to retirement. There are a number of reasons that more than a third of over 55s now share this worry, including:
- The gender pensions gap: There is a real and tangible difference between the pensions pot of men and women. On average, a man earns 80% more than a woman across his career, which means he has greater capacity to save, according to research by the Chartered Insurance Institute. The same study revealed that this means that the average woman’s pension pot is only a fifth of her male counterparts’. This helps to explain why more women than men are worried about running out of money in retirement.
- The rising cost of care: The Money and Pensions Advice Service estimates ‘£15,000 a year, for 14 hours of care a week’, for those needing home care in later life; costs can be considerably more in some areas of the country and if you need greater levels of care, such as live-in carers. This can leave those approaching retirement worried about whether they have saved enough for these large costs.
- Paying back a mortgage later in life: Rising house prices mean that increasingly people are taking out mortgages later in life and/or over longer terms, meaning that many more people are still paying back their mortgages after they retire. The Financial Conduct Authority has found that: ‘terms are increasing with 34% of mortgages now longer than 30 years… 40% of borrowers who took out a mortgage in 2017 will now be over 65 when their mortgage matures’.
- Coronavirus altering retirement plans and funds: The coronavirus crisis has altered many people’s plans for retirement, reducing earning capacity for many in the later stages of their careers and impacting the businesses of the self-employed and business owners.
How could equity release help?
For those worried about not having enough money to live on during retirement, releasing property equity might be a solution, says 55Plus Equity Release Founder and Director, Jan Johnson: “With the rising costs of care, the gender pay gap and the increase in house prices, it’s completely understandable why people are so worried about having sufficient money to live on comfortably in retirement, especially as more of us are living longer.
“For people with these worries, releasing equity from their homes could be a possible solution for them. Equity release enables homeowners over 55 to access some of their wealth currently tied up in their house and may help to give them greater financial peace of mind in their later years.”
If you’re worried about having enough money to retire on, then one solution may be to release some property equity. If you want an impartial meeting with a friendly face (remotely as required), then one of our expert advisers would love to discuss your individual circumstances.