Reverting to Childhood

There is a saying that we revert to our childhood when we get older. This may or may not be true. It would perhaps be rather pleasant if we do, particularly if life becomes more relaxed and straightforward. However one aspect which we hadn’t expected is revealed in a recent study by insurance provider LV=.

Astonishingly the report states that as many as 15% of people in retirement have an income below £8,000 per annum. After essential living costs, this allows for just £8 per week for other expenses which is less than most children receive as pocket money.

If this is the position today, things will only get worse in the future with pension incomes being under pressure due to inadequate contributions and annuity rates, and low savings ratios.

The situation will be dire for those who go into retirement with debts. According to a report from the International Longevity Centre, 10% of elderly people have unsecured debts and pay over £85 per week to service it. Given that the state pension is only £140 per week, there will be no pocket money for these people.

For those affected, if they are homeowners and provided that their mortgage is not too high, equity release represents their best chance of avoiding poverty in retirement. Many equity release plans, including interest only Lifetime Mortgages, are now available which are designed to supplement retirement incomes, and they can be structured in a way which does not adversely impact on state benefits if applicable.

The second childhood need not be a daunting prospect if specialist advice is taken from an independent financial adviser like Bower who can explain all the options which are available with modern equity release plans.