At present 19% are definitely considering using equity release or are planning to in retirement, however 32% of people said a government stamp of approval for equity release would make a positive difference to the likelihood of them taking out an equity release product in the future.
ERSA revealed just 26% of people could identify the average cost of care as £504 per week. Worryingly, 41% thought it was much less than this and just 14% of those aged over 66 were able to identify the correct amount.
Claire Barker, chairman of ERSA, said: “The Dilnot Commission’s recommendations are to be welcomed. The current system is confusing and so anything that clarifies how the costs of long-term residential care are to be split between the citizens and the state will help people with their retirement planning.
“One of the unfortunate factors of living longer is the increased likelihood of needing to pay for long-term care costs. The State cannot afford to pay for this potentially huge bill alone and if people have built up a certain amount in assets – especially in their home – it is sensible to expect them to pay towards the costs.
“But it is also sensible to cap how much people will have to pay and what the Government decides to do next will be crucial.
“Equity release has always had a role to play here. In the first instance, it often allows people to stay in their own homes for longer and to pay for care there but it also has a major role to play with paying for residential care costs.
“If the Government offers an endorsement of equity release we will see a significant shift in the number of people looking for advice from independent solicitors and advisers as to how equity release can form part of their financial planning in retirement.”
Dean Mirfin, group director at Key Retirement Solutions, said: “The fact that 19% are considering equity release is a very positive surprise, certainly a lot higher than in previous research. What it shows is that the education about equity release is probably at its best and highest level.
“Because this could be such an important aspect for financial planning for those in need of care, even for those where it’s not something they directly advise in, brokers should keep themselves aware of equity release. Firstly it’s something they should be aware of because of the aging population and secondly, many clients may have parents for which equity release may prove appropriate. So definitely brokers should align themselves because of the opportunities that will present itself.”
