When it comes to saving, a lot of people have good intentions. We might plan to squirrel away money into a savings account or make savvy investments, all with the intention of ensuring that we have an emergency fund in place.
Unfortunately, the actual process of saving isn’t always so easy; emergencies can deplete our funds, or we may simply not have enough disposable income to save effectively. This means that savings aren’t always there when we need them, and it can be troubling to face a hole in our finances with nothing to fill the gap.
Retirees can feel this issue particularly acutely if they need savings to supplement their monthly income. Whether this income is from pensions or other sources, the fact remains that if savings are needed to keep topping up the pot, there may be problems when the fund runs dry.
Alternatively, pensioners may find that they simply haven’t saved enough to meet their needs. Either way, the concern is that many people with these issues may bury their head in the sand rather than seeking a solution.
If you’re retired and worried that you might be running your savings down too quickly, or you’re currently working but concerned you might not be putting aside enough money each month, then this is probably sounding a little too close to home.
Could your property bring you peace of mind?
Facing up to the fact that you’re having a savings shortfall, though sometimes uncomfortable, is an important first step towards finding a solution.
One such solution is equity release – a process which allows you to release some of the cash that is tied up in your home. Available to eligible applicants aged 55-95, equity release can be used to take a lump sum as well as, if desired, additional smaller amounts through use of a drawdown function. The most popular form of equity release is a lifetime mortgage, which is secured against your home.
Last year, the Financial Times suggested that the UK’s retirement savings may be falling short by around £11 billion each year, a concerning figure which suggests that people need to act sooner rather than later. Deciding that it’s time to take action is a good first step, but then it’s time to start fully investigating the available options.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. This means that it is important to be aware that there are other options too – such as downsizing – although, of course, this would mean leaving your current home.
If you’re considering equity release it is recommended that you read ‘is it right for you?’ carefully.