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Post-Epidemic Status: Equity Release or 4-Year Delayed Retirement?


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Millions of British people in their fifties may be forced to delay retirement by an average of four years due to financial constraints and the need to support struggling family members. This is according to a new study by financial services provider OneFamily.

However, not everyone in their fifties is willing to delay their retirement. A good number are considering using equity releases to access value from their home if it means they can retire earlier. So, how do you decide which option is best for you? Let’s take a look.

How did the epidemic affect the British retirement plan?

According to OneFamily, Britons over the age of 50 need to increase their retirement by an average of four years to recover from the financial impact of the epidemic.

Moreover, one in eight (12%) who say they are retiring late expect to do so seven years later than initially planned. In total, three million over the 50s will have to retire later than planned.

According to OneFamily, the main problem is that people over the age of 50 have recently been affected by their savings and investments. The study found that one in three (%%) lost money in the last 1 month, with savings dropping by an average of £ 2,000.

In addition, money has shrunk in the last year and a half because people in their 50s and 60s have helped struggling family members. In fact, about one in six (17%) say they have sunk their savings to help relatives affected by the epidemic.

Faced with the possibility of postponing retirement, some Britons are looking for alternative solutions to avoid this path. According to research, one in ten people in their 50s who have not yet retired will consider using an equity release to access value from their home if that means they can retire early.

Delayed Retirement or Release Equity: Which Is the Better Option?

There is no one-size-fits-all solution. Both options have advantages and disadvantages and the best option will be determined by your specific situation.

Retirement delayed

Delaying your retirement will give you more time to save money. Instead of investing or saving for your future and starting withdrawing from your savings or pension, most of the time when they retire, you can continue saving to make a big home egg.

Moreover, delaying retirement means you will not rely on your savings as long as you retire at a normal age.

That being said, there are times when postponing retirement may not be the best option. An example is if you work in a physically demanding job or one that could endanger your health and general well-being as you get older.

Equity release

Equity release allows you to access your home equity in the form of cash. You can use this cash for your leisure fund and avoid working longer than you should.

It is fast becoming a popular option for those who want to get value from their home. Orrow recipients are currently benefiting from lower interest rates and more options for equity release products.

The study found that the average lifetime mortgage rate has declined by 2.39% in the last five years. Last year, orrow recipients paid 4.4%, down from 5.7% in 2015. Meanwhile, according to the Equity Release Council, the number of equity release products is high from July 2021, which was a record months ago.

In addition, some providers are offering homeowners extra flexibility. Some plans allow you to pay off all or part of your monthly interest, reducing the amount you owe at the end of the loan.

However, not without the flaws of equity release. For example, it lowers the value of your estate and as a result, you can leave that amount to your beneficiaries. If you want to take this path, it is important to inform your family about your intentions.

In addition, having extra income from an equity release can reduce your entitlement to benefits such as public credit and pension credit.

If you are thinking of an equity release, it is best to consult a financial advisor first, especially one certified in the case of an equity release. They can advise you that this is the best option for you. They can help you find the best deal for your situation.

The last row

If Covid-1 has a spanner in your retirement plan, you’re not alone. This is a problem that many Britons are facing.

If you are still fit and healthy, you can choose to work longer to make a big nest egg. If this is not possible, you can use the equity release to access some value in your home. Carefully evaluate each person’s advantages and disadvantages to determine which is the best option for you.

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