Life expectancy in the UK has been extended by an average of 20 per cent in 20 years. This means longer retirements, which require more funding, making alternative capital raising like equity release an option for property rich cash poor Brits.
According to the Office for National Statistics (ONS), a man who turned 60 in 2006 is now expected to live for a further 21.1 years, while a woman who also turned 60 in 2006 is expected to live for a further 24.1 years.
This is an increase of 26 per cent for men in the space of 20 years, because a man turning 60 in 1986 was expected to live for a further 16.8 years, while women's life expectancy has increased by 14 per cent in the same period, up from 21.2 years.
The Government's current state pension age is 65 for a man and 60 for a woman, which means that a man who turned 60 in 2006 could be in retirement for an average of 16 years, while a woman who also turned 60 in 2006 could be in retirement for an average of 24 years.
For this reason, retirement planning has never been more important, and, as pension values fall due to the recession and poor performance on the stock market, other options are being considered.
Equity release is one option open to homeowners of retirement age, and is currently under discussion by industry experts, Government and consumer bodies, due to the potential it has to contribute towards funding retirement, providing it is safe and SHIP (Safe Home Income Plan) regulated.
In fact, it has been predicted that by 2016, 42 per cent of the population of England and Wales will be eligible to take out an equity release plan, suggesting that there will soon be an increase in demand.
Commenting, chartered financial planner at Fairinvestment.co.uk, Sharon Bratley, said: "The fact that life expectancy is increasing and the prospect of a longer retirement should be a cause for celebration, but many people will still worry about how they are going to afford to live during their retirement."
"Reduced income in retirement could mean that taking advantage of the equity built up in the property could become a real consideration for many. Essentially, ensuring that the mortgage gets paid means that not only will homeowners retain a good credit record, but the option of equity release will be available to them in retirement should they need it."
