The research, based on 1,761 customers who have released equity this year from Key, reveals the direct benefit that today’s retirees can get from repaying debt.
Earlier this year Key reported that UK pensioners were sitting on an estimated £183 billion of debt. Such levels of debt are naturally having a grave effect for many having to meet the monthly burden of servicing a range of debt including loans, mortgages and credit cards.
The latest analysis reveals how positive an effect being free of serviceable debt can be. On average debt repayment is freeing up £494 in monthly income. The research looked at the average net income for those taking out an equity release plan between January and August of this year and this equated to £1,299 per month. Repaying debt therefore provides the equivalent average increase in disposable income of 38%.
Dean Mirfin, Key Retirement Solutions’ group director, said: “Much, understandably, has been said about the increasing levels of debt amongst UK pensioners and the huge effect this has on the quality of life in retirement. Many expect retirement to be a time to be debt free but in this latest research 46% of those releasing equity with Key had some form of debt which they wanted to repay.
“For many a solution, to help increase income through debt repayment, is equity release. A £494 increase in disposable income no doubt will have a considerable effect on the quality of life for many if not all UK pensioners who are servicing different forms of debt.”
