You have free time, of course, which is nice.
But you had never imagined the financial stress.
You have a pension, but it doesn’t quite cover your day-to-day expenses. The shortfall isn’t massive, but it adds up, month after month.
Watching your bank account slowly slip into the red is causing you sleepless nights.
At this stage of life, you wanted to be in a position to help out other family members financially. Now you hope they never ask, because you don’t want to turn them down.
And you would really like to do some home renovations, revamping your kitchen and updating an old bathroom. But that is completely out of the question, when money is so tight.
What can be done? Will you be forced to go back to work?
It is a common worry for many retirees, even those who have saved into a pension all their life.
But if it is a worry for you too, there is a potential solution for you to consider – one which might surprise you.
I’m talking about equity release (also sometimes known as a lifetime mortgage).
This is an option for many people over 55 who've paid off all or most of their mortgage, and now have a financial shortfall.
It involves withdrawing money against the value of your home.
You stay the owner of your home, and your debt will be repaid posthumously out of your estate (unless you sell your home, in which case you might have to repay it earlier).
As I mentioned last week, people used to be afraid of equity release, because the market was not well regulated and the products were relatively inflexible.
Too often, people had to take more money out of their home than they really needed and compound interest mounted up, leaving them with very little equity in their own homes.
But the equity release products available nowadays are much safer and more useful than they used to be.
So don't let out-of-date horror stories put you off exploring this option in a logical fashion!
I’ve seen many equity release plans implemented with a happy outcome for people who came to us in frustration and fear because, through no fault of their own, their pension wasn’t enough to live on.
Although equity release shouldn’t be relied on to replace a pension, it’s very useful as a supplement to your pension payouts. We have helped many retirees to ease their financial burdens this way.
It isn’t only for people in dire need, either.
Under some circumstances, you can use equity release as a way to reduce inheritance tax liabilities, drawing money out of high-value properties and gifting the money to loved ones as a potentially tax-free gift – although this needs careful discussion with your financial adviser here at Punter Southall Aspire.
Or take the widow we helped a few years ago.
She wanted to carry out some important home improvements, but had only £2,500 in savings.
We arranged for her to draw £10,000 from her home so she could do the necessary renovations.
Because this was an investment in her home it will might very well pay for itself when the time comes to sell. And there is still plenty of equity left in her house.
Meanwhile, she still has the option to draw more equity out of her house at a future date.
Just knowing that the drawdown option is there, even if she doesn’t need to use it, helps her to feel financially secure.
Imagine not having to worry about your day-to-day expenses any more…
Or finally being able to afford to enjoy your retirement more than when you stopped work.
That’s what equity release accomplishes when it’s used in the right way, for the customers it suits best.
As always, I advise against making any snap judgements or rash decisions about your finances.
Have an in-depth conversation with one of our mortgage advisers to help you determine whether equity release might be a good fit for you.
Just hit ‘reply’ to get in touch with me today, and get the ball rolling.
You can rely on us to consider your unique situation and identify a suitable solution that gives you peace-of-mind.