Homeowners who are getting ready for retirement are more open to professional advice on equity release than those already retired, according to latest research into home equity withdrawal commissioned by Just Retirement.
The research questioned over 1,000 homeowners aged over 55 and highlighted opportunities for advisers to discuss strategies for using housing wealth in retirement peak as people prepare to give up work.
“The run-up to retirement is a time when people look at their finances carefully and start planning how best touse or pass on their wealth,” said Stephen Lowe, group director of external affairs and customer insight at Just Retirement.
“Increasingly, for baby boomers who have benefited from rising house prices, that involves looking at how best to use the wealth tied up in their homes.”
The study found professional advisers were the preferred source of information on equity release in 19% of cases, but for those set to retire in the next year this more than doubled to 39% and for those one to two years out it was 36%.
“People are most likely to seek information from intermediaries but cited a variety of other sources including banks, solicitors, friends and family and the internet,” said Lowe. “But the obvious spike among those yet to retire suggests a clear opportunity for advisers to engage with this age group at an early stage.
“For many of today’s retirees, their property value will account for a significant – and for some with small pensions – the most significant proportion of their overall wealth. It is available to be used or passed on at some point so it needs to be factored into the retirement planning conversation, ideally from an early stage.”
However, only one in 10 of those surveyed could name an equity release provider without being prompted. Research showed the majority did not know basic facts such as that equity release is regulated, interest rates are fixed or the ‘no negative equity guarantee’ that the loan repayment will never exceed the property value.
“It is inevitable that people will need to consider housing wealth alongside financial planning for income, inheritance or long-term care and professional advisers are best placed to help them,” said Lowe. “These are difficult times and we believe equity withdrawal should be factored into the policymakers’ decisions as well as being placed firmly within financial planners’ range of solutions.
“Retirees’ incomes and particularly those approaching retirement are being squeezed. In this environment, equity release is clearly part of the solution to help retirees generate income and capital to attain an acceptable retirement.”