Nearly 25% of retirees financially struggling despite paying off mortgage
Around 21% of retirees say that, despite paying off their mortgage, they are “unable to live fulfilling lives” due to insufficient money in their retirement funds.
According to data from Senior Capital, which surveyed around 2,070 respondents, 22% of retirees surveyed were already reducing or stopping spending on medications and 15% were skipping meals due to their financial situation.
The figures also showed that 11% of British retirees have no savings at all, and almost one in five retirees across the UK will be on the poverty line as they do not have sufficient money in their pension pots.
One in seven said that the largest strain on their mental health was worrying about funding their retirement.
Prime Minister Rishi Sunak recently pledged that, if the Conservative Party is elected, he would introduce a tax-free pension allowance through a triple lock plus, which would save pensioners £275 by 2030.
Equity release could help
Senior Capital has said that, while the pledge is promising for pensioners, equity release could be a better way to help pensioners access capital to fund their retirement.
Rudy Khaitan, Senior Capital’s managing partner, said: “There is a growing need for new products that offer greater flexibility and choice, particularly in the relatively under-served later life lending market.
“For pensioners or anyone planning for their retirement, loan to value [LTV] is a critical component when assessing your quality of life during your later years, so it’s vital to investigate a multitude of options that can help ease your financial obligations, as remortgaging may not always be the right option.”
He added: “The right equity release mortgage product, particularly those that offer the greatest flexibility through limited prepayment penalties, can be the better option versus a more traditional mortgage when you want to unlock the value in your home without taking on additional monthly repayments.
“It allows homeowners to access the equity built up in their property, providing a tax-free lump sum to supplement regular income, whilst still retaining ownership and the right to live in their home for life or until they move into long-term care. This can be particularly advantageous for those who are retired or have limited income, as it offers financial flexibility and stability without the burden of servicing higher mortgage repayments.”
In March, a study by the Equity Release Council (ERC) found that a fifth of people do not expect to retire mortgage-free.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
