"The reality is that many people, likely millions nationwide, will have to take on some form of debt in retirement to fund their post-work life or even care."
Everybody knows that technology and life in general is changing at a rapid rate, but are our opinions changing at the same pace? Today, mobile phones are pretty much personal computers, electric and hybrid cars are whizzing around our cities, and all of us are living much longer thanks to the huge improvements in medicine and technology. But regardless of this rampant technological development, people, or rather people’s views and opinions, have not evolved fast enough.
When it comes to taking on debt in retirement, most people would raise an eyebrow and claim that ‘it won’t happen to me’. But the reality is that many people, likely millions nationwide, will have to take on some form of debt in retirement to fund their post-work life or even care. We are living decades longer and yet most of us have not saved enough to live on, so we will have to find the funds from somewhere else – it’s just simple maths.
The vast majority of today’s employed population will not be able to pack it all in at 65, and millions of people will review their financial position pre-retirement and realise that their pensions and savings will not stretch far enough. But for those pensioners who have been fortunate enough to join the housing market, and perhaps even climb the ladder a little bit, their home will most likely be worth more than their pension. The logical solution, if not the only solution, must therefore be to tap into this property wealth.
However, as I have alluded to, remortgaging in later life or downsizing in old age is seen by many as signalling some kind of failure. Of course, we would all love to live in the house we call home forever but this can no longer be a sustainable reality for the majority of homeowners. The solution, therefore, must involve a seismic societal shift in which we all start to change our opinions on how we finance retirement.
If you are under 65 today you won’t have the same retirement as your parents and grandparents, and there’s nothing we can do about that. You only have to look at the creaking, close to breaking point social care system to see one impact of our quickly ageing society. Theresa May and co recently showed that this is an issue that must be treated with great care, as the Tories social care fiasco surely proved that throwing ill-thought out policies at the problem will backfire. Instead we all need to think about retirement finance in a level-headed, logical way. If pensions are no longer in a position to be the primary retirement finance vehicle, why can’t other avenues like property take over?
This idea is now taking root as many homeowners are realising that their property will have to be part of their retirement plans. However, the silly societal norms persist. We need to normalise remortgaging in old age, downsizing and indeed alternative options like equity release if we are to truly help people enjoy retirement, but of course this will take time.
The current crop of elderly homeowners come from a different era to their sons and daughters. But the so-called ‘Baby Boomers’ are more liberal and free-thinking, so perhaps we will see this much needed sea-change in generally held opinions catalysed by their differing outlook. However, this is likely not to be enough.
In order to cure this problem once and for all we need a combined effort from the government, industry as well as the young and the old to help continue the normalisation of accessing property wealth in retirement. It may be a bitter pill to swallow for some, but the alternative is more poverty for pensioners and a social care system completely crippled.
