"The research in this whitepaper clearly shows that there is unease in the UK when it comes to retirement finances. "
Justin Wysocki, Marketing Director Age Partnership
The Resolution Foundation have carried out research and found that up to a third of young people face living in private rented accommodation all of their lives. However, property is fast becoming one of the most popular choices for funding retirement.
Property and retirement
A new report from Age Partnership reveals how 1 in 10 plan on downsizing, and 1 in 20 plan to use equity release. The average Brit approaching retirement in the next 10 years plans to raise £62.1k from downsizing and £61.1k from equity release and the younger generation envisage a similar amount.
In Yorkshire the figures stand at,
Yorkshire and the Humber
Downsizing - £43,750
Selling up - £53,200
Equity Release- £41,000
In a report earlier this year, the ONS revealed how Brits have amassed £4.6trillion in property wealth and see property as second only to employer pensions as the safest way to save for retirement. Yet, this may mean young Brits who are left renting, miss out on vital retirement funds.
The Equity Release Council reports that equity release is an increasingly popular way for retirees to raise funds, their Autumn 2017 market report showed that the number of products on the market has increased 225% in the last decade. Yet with younger Brits struggling to get on the housing market, this raises questions about whether growth can continue.
Retirement living costs
Over 1 in 3 people in Yorkshire are currently struggling with money, and over 1 in 3 (47%) retirees say they underestimated how much money is needed to live comfortably in retirement. Almost a quarter of people in Yorkshire also wither have or think they will need to ask their children or other relatives for financial support in old age.
Real retiree living costs are currently £208 according to the whitepaper, however basic state pension is £122.30 per week. Leaving a deficit of £85 per week. That’s £340 per month retirees need to find from other sources, which is why monetary channels such as property and workplace pensions will become more important than ever.
Worries, concerns and expectations
1 in 5 of Brits (who are more than 10 years away from retirement) however, said they don’t know how they will fund it yet, though Age Partnership’s experts think the sooner you start preparing the better.
Early planning can help reduce worry around retirement and manage expectations regarding your lifestyle and what you need to be putting away each month. Some of the biggest concerns for Brits included…
· Standard of living and inflation
o 68% of non-retired people say they expect to live off the same income or higher when they are retired. However, many already describe themselves as struggling financially.
o With the increasing cost of living in the UK it’s no wonder that 50% of people in Yorkshire are worried about inflation and its effect on their pension savings.
· Ageing population
o 43% are worried that the balance between the working population and the retired population is not sustainable enough to fund retirement through the state.
o 2016 stats show that 11.8 million Brits were over 65 and this is only set to increase according to the Pension Policy Institute. By 2050 it could be as high as 16.8million, that’d be 36% of the working age population.
o Increased life expectancy is also a worry, 39% are concerned they don’t know how long their retirement may need to last.
· Cost of care
o Almost half (48%) of people in the UK are concerned about the costs of elderly care and the lack of funding. They worry about the costs associated with deteriorating health such as paying for a carer or assistance and how this could deplete their retirement savings.
o 83% of people in Yorkshire haven’t factored in the costs of elderly care to their future financial plans
o According to NHS and Age UK’s 2015/16 figures, there were 1.31 million new requests for social care support from older people.