Lease for Life calculator
Some people are able to walk out of work for the last time & receive a golden handshake that will ensure they have plenty of savings to fund a long & happy retirement. However this is not always the case.
The simple fact is for many people there is a huge gap between what they need for a comfortable retirement & what is available in their pensions. As a result one on three working adults now fear they won't have enough money for their retirement according to a survey by Which Money.
Recent research has shown people thought they would need about £300 a week to live on when they retire. When you consider the basic state pension is just £84 a week you can see there is a considerable shortfall. It's claimed you need to start putting £150 away every month from the age of 25 in order to plug the financial gap. However, most people don't start contributing regularly to a pension unil they're in their 30's.
On top of this, the government is increasing the age at which we are able to claim our state pension - the eligible age will rise in 2024 to 66, in 2034 to 67 & in 2044 to 68. This is due to the fact the country as a whole is now living longer & in the future there will be fewer workers to pay for a greater number of pensions.
As a result, the Government Pensions Commission, headed by Lord Turner, was drafted in to find a way the country could defuse what's been called "the demographic time-bomb."
The resulting white paper sets out the fact that people will be eligible to collect their state pension at an older age than currently in place. This is offset by the fact the state pension will be more genrous.
Nevertheless, most financial experts agree if you want a comfortable retirement you can't rely on the government to provide you with an income & you need to start planning for this from an early age. Due to the negative press of recent years, surrounding many private & company pensions, a growing wave of workers have lost confidence in pensions being ther prime source of income. As a result people are looking for other ways to provide themselves with an income in later life.
Interest in Equity Release has soared in the last year according to Age Concern.
With more than £1,000billion tied up in the homes of the over 65's & the equity release market now 25 times the size it was 10 years ago, it's hardly surprising.
Releasing equity can make a huge difference to a person's standard of living & is an appealing choice for a person who's 'property rich' but 'pension poor.'
As the population ages, releasing cash in this way will become the norm. Figures show the equity release market is set to grow by about 25% a year from 1.1 billion in 2005 to 2.9 billion in 2010.
If you are considering an equity release product you should be aware taking on such a product is a major committment & therefore it's essential you take independent financial advice before you proceed.