Deciding when to retire is a significant life choice, and it’s important to consider whether you can afford the retirement lifestyle you desire. Many people are unsure about how much money they will need in retirement, with a recent survey showing that 51% of pre-retirees lack confidence in this area. To help with financial planning for retirement, the Pensions and Lifetime Savings Association has provided estimates for how much retirement could cost. For a single-person household to live a moderate lifestyle, the suggested annual income needed is £31,300, increasing to £43,100 for a two-person household. For a minimum standard of living, the figures are £14,400 for an individual and £22,400 for a couple, with a comfortable standard of living requiring £43,100 for a single person and £59,000 for a couple.
If you’re concerned that your current savings may not be enough to support your desired retirement lifestyle, there are options available to supplement your income. One such option is equity release, which allows you to access the value built up in your home. Depending on factors such as your needs, age, and the value of your home, you can release tax-free cash ranging from £10,000 to around 50% of your home’s value. Equity release involves repaying any existing mortgage and does not require regular repayments, with the amount released plus accrued interest being repaid when you pass away or move into long-term care. There are different schemes available, such as lifetime mortgages or home reversion plans, which could impact your estate’s value and future care payments.
Aside from equity release, other ways to supplement your retirement income include downsizing to a smaller property, renting out a room in your home, speaking to family and friends for support, or exploring potential benefits you may be entitled to. It’s crucial to assess all available options and get advice before making any decisions about your retirement finances. If you decide that equity release is a suitable solution for you, seeking advice is mandatory. Age Partnership is one organization that can provide initial advice on equity release for free and without obligation, with an eventual advice fee of £1,895 only payable if your case is completed. Age Partnership is authorized and regulated by the Financial Conduct Authority, ensuring that customers receive expert guidance on their financial choices.
