Retirement aspirations and financial planning are driving equity release customer choices, with almost a third of individuals wanting more from life, new research from Standard Life Home Finance has shown.
The research, conducted across 418 people who had taken out equity release and 94 who had declined to proceed after enquiring about the products, found 32% of those who took out equity release did so because they wanted more from life as they got older and needed additional money to do this, while 11% said their family and friends needed their support.
Meanwhile, nearly a fifth (17%) say that they had always known that their pensions and savings were not enough, while a further 11% said they reviewed their options as they realised their finances would not provide them with the standard of living they wanted.
Less than one in ten said their choices were driven by a life event which derailed their retirement plans, such as divorce, redundancy or illness.
Kay Westgarth, head of sales at Standard Life Home Finance, said: “While historically some people have been comfortable pigeon-holing equity release as a product of last resort, speaking to customers who have taken out equity release or seriously considered this option, you can clearly see that this is not always the case. Instead, it is frequently being used as a financial planning tool, a springboard to achieving retirement ambitions or an opportunity to support the wider family.
”Whether a person uses their housing equity as an inheritance, part of their retirement planning or both, we need to ensure that people take the time to consider what role their largest asset could play in retirement. “
Standard Life Home Finance said that having identified a financial shortfall, 40% of over-55s who went on to take out equity release initially felt pensive about their finances and took time to consider their financial options.
Almost one in five (19%) felt confused as they were unsure how to secure the funds they needed and 18% were worried as they knew how much money they needed but didn’t have. One in four (25%) said they had considered downsizing, while one in five (20%) contemplated using their savings before opting for equity release.
Jim Boyd, CEO of the Equity Release Council, said: “These findings show that modern equity release is flexible enough to provide a suitable solution in a variety of circumstances.
“While this versatility can prove valuable when unforeseen life events crop up, releasing equity is increasingly used for wider later life financial planning by well-advised homeowners who are fully versed in the range of options available to them.
“Specialist advice is vital to help people judge the right time to pull different levers, from cashing in investments to downsizing or using equity release to improve their quality of life without needing to move.”
[Main image: inhyeok-park-8hfWsNc6fhk-unsplash]
