It’s fair to say that women approaching retirement in the UK are facing something of a confidence conundrum; while they are the most anxious about being able to afford a comfortable retirement, they’re least likely to consider alternative funding as a way of plugging this gap.
This is according to a study carried out by key, who provide specialist equity release services to older home-owners.
We’ll explore the study in further detail below, while asking whether equity release is a viable solution for female home-owners in the current climate.
What Does the Study Tell Us?
According to the findings, the proportion of homeowners aged 55 and older were increasingly worried about running out of money in retirement.
In fact, the number of respondents with such concerns has increased from 27% to just over a third (34%) in the year ending 2020, with women (48%) representing the most anxious demographic in the marketplace.
Interestingly, the level of anxiety is also increasingly markedly amongst men, with 32% of male home-owners admitting to be concerned (up nine percentage points from last year).
Similarly, the research shows that women feel as though they have considerably less power over choosing when they can retire. Less than half of female respondents (41%) of women still working are confident they’ll be able to select their retirement date, compared to a hefty 56% of men.
What’s Equity Release – The Pros and the Cons
Equity release may provide a viable option to women who want to safeguard their financial future, with this term referring to the process of accessing your property’s value and unlocking a lump sum for retirement.
In simple terms, this enables you to tap into the wealth that has accumulated in your property over time, without having to sell this asset and relocate.
Interestingly, the aforementioned study produced by Key also showed that equity release was particularly popular amongst older women, suggesting that it may offer a viable solution to their long-term financial and retirement anxieties.
However, it’s important to think long and hard before entering into an equity release scheme. Firstly, this represents a lifetime commitment, particularly if you enter into a ‘lifetime mortgage’ that’s secured on the property. Of course, this option also helps you to retain ownership and potentially ring-fence some of your property’s value, but it’s a sizable debt that can accelerate rapidly over time.
A less attractive option is home reversion, where you sell all or part of your home in return for a lump sum or regular payments. Also, you’ll continue to reside in the property until your death (rent free, of course), but you’ll have to maintain and insure the home during this period.
Ultimately, a lifetime mortgage is the best option for nervous female home-owners, while you can even use an equity release calculator to make a more informed decision based on your circumstances and the value of your home.