GE Life has launched a new guide to equity release, aimed at both consumers, their families and financial advisers.
Four in ten people retiring in the next five years say they will seriously consider equity release as a method of boosting their retirement income, GE Lifes State of Retirement Report has shows.
The guide is designed to help families and their older relatives explore the different ways of releasing equity and increasing income in retirement to fund a more comfortable lifestyle.
The study shows despite a pensions gap of 57bn, 63% of retirees own their own home outright. Although 22% say they are planning on leaving their home to their children, this figure looks set to fall significantly, dropping to 15% for people retiring in the next five years. With nearly nine in 10 people (88%) now aware of equity release it is becoming considerably more vital that people fully understand the product and its implications.
Simon Little, equity release product manager at GE Life, says: What the State of Retirement Report reveals is that more people are thinking of turning to Equity Release to help supplement their income in retirement because the reality of retirement for many is very different to what they had planned or imagined.
“For some releasing equity in their property can help make life more comfortable. For others, it will simply help to pay for lifes necessities such as the weekly shop or much needed repair work on their home.
However, money is still a taboo subject for many families. This Guide should help people discuss money issues and explore solutions that may make life easier. Releasing equity from a house is just one option.
Little adds: In our experience, the elderly do not always discuss their financial situation with their family when they take out an equity release scheme. After the death of an elderly person, relatives are often shocked to find that they are not going to receive the property outright and shocked to learn about their relatives financial situation. We hope that this guide will encourage people to talk more openly about their financial situation and explore all the options available.
The guide looks at the pros and cons of the various options in which pensioners can increase their income as well as suggesting sources of further information and advice. It also provides a list of possible options, which include claiming benefits, seeking grants or other financial assistance, cutting living costs, dipping into savings and investments, downsizing and moving to a smaller house, asking family and equity release.
It runs through the different types of equity release products available, how they work, the risks involved and which type of scheme may be most appropriate for which particular situation. It also discusses the inheritance implications and gives a number of case studies to illustrate different situations.
Little adds: Talking to your elderly relatives about their financial situation is important. There are often ways for younger generations to help. We hope that this guide will help encourage those discussions.