Holistic approach the only way for retirement finance

It has become apparent to anyone who takes even a passing interest in later life finance that new ways to fund retirement must be pursued as a matter of urgency. Traditional ways the general population have funded their later life – things like private pensions, savings, investments and the state pension – have grown so slowly over the past few decades that millions of retirees are staring at a retirement beset by financial struggle. Luckily for these same retirees, property is serving as a real financial safety net as one of the few investments that, on average, has performed well over time. And yet, the Government and the wider society still doesn't focus on the power housing wealth can have to help people fund their retirement – but give them time.

Related topics:  Retirement
Andrea Rozario
22nd December 2016
Andrea Rozario Bower Retirement
"Property is not yet seen by those in Government and the rest of society as an integral part of retirement planning and financing, but this will change."

According to data from the Office for National Statistics revealed by the Equity Release Council, the average pensioner has seen their retirement income rise from around £12,000 per year in 1994/95, to just over £21,000 20 years later – only a 66% increase. However, over the same 20-year period, pensioners will have seen their property increase from a national average of £80,000 to over £200,000 – a 148% increase. It's therefore hardly surprising that thousands of elderly people are turning to their property to help them fund the retirement they want.

What is surprising, however, is that property is not yet seen by those in Government and the rest of society as an integral part of retirement planning and financing, but this will change. As more homeowners fall back on their equity as their retirement saviour, politicians will be forced to realise that property has to be part of the future of retirement financing. How do I know that this will be the case? You only have to crunch the numbers.

By 2030, the number of us aged 65 or over will have increased by around 55%, and the number of people aged 80 and above is expected to double from three million to over six million by 2030, according to data released by parliament, ironically enough. There is nothing we or the Government can do to stop the greying of society, so millions more retirees will soon be assessing their financial options than are today – this is unavoidable - and with pensions paying out peanuts and savings stagnating, many will turn to their biggest and most profitable asset – their home.  

The Government of 2030, be they blue, red, yellow or even purple in persuasion, will be forced to consider the real merits of retirees accessing their property wealth in retirement. But instead of tackling that issue in 14 years, today's Government should have the foresight to prepare and look ahead to this inevitable conclusion.

It's of paramount importance to the well-being of future retirees that the politicians start helping people consider all of their options now, instead of putting their full weight behind savings and pensions that simply aren't providing enough. But irrespective of ideology or party, short-termism seems to pass down through political generations with MPs never thinking past the next general election. But the issue of retirement finance must be addressed with cross-party co-operation, as the elderly population is only going to get bigger and the issue of financing an ever-lengthening retirement is only going to get more serious.  

Brexit may be stealing the headlines, but this topic will be quietly ever-present for decades to come and something must be done to prepare for the future of retirement financing. Although change may sometimes seem to come at glacial pace within Westminster, we have seen a concerted effort in recent times, namely from ex-Chancellor Osborne, to give pensioners the freedom they deserve over their money, so let's hope the new crop are just as committed to offering people the freedom of financial choice they deserve when it comes to property wealth and retirement finance. I'm quietly confident, but we need to keep reminding them!

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