Retirement aspirations drive appetite for equity release

Posted on Tuesday, May 17, 2022

Retirement aspirations and financial planning is driving equity release customer choices, with almost a third (32%) wanting more from life as they get older and 28% focused on financial planning, the latest research from Standard Life Home Finance shows.

The research considered views from 418 people who had taken out equity release and 94 who had declined to proceed after enquiring about the products.

It found that 11% said their family and friends needed their support, while 17% said that they had always known their pensions and savings were not enough.

A further 11% revealed that they considered their options as they realised their finances would not provide them with the standard of living they wanted.

Elsewhere, less than one in ten (8%) said their choices were driven by a life event which derailed their retirement plans, such as divorce, redundancy, or illness. 

Meanwhile, 17% who did not take out equity release said their need for additional money was driven by a life event. 

The research highlighted that this cohort was also more likely to say they had always known their pension and savings were not enough (20%) and be keen to support their family and friends (15%).

Standard Life Home Finance head of sales Kay Westgarth says: “While historically some people have been comfortable pigeon-holing equity release as a product of last resort, speaking to customers who have taken out equity release or seriously considered this option, you can clearly see that this is not always the case.”

“Instead, it is frequently being used as a financial planning tool, a springboard to achieving retirement ambitions or an opportunity to support the wider family,” Westgarth adds.

Having identified a financial shortfall, 40% of over-55s who went on to take out equity release initially felt pensive about their finances and took the time to consider their financial options.

Almost done in five (19%) felt confused as they didn’t know how to secure the funds they needed, and 18% were worried as they knew how much money they needed but didn’t have it. Only 3% were confident when they found they would need additional money to meet their needs.

Rather than purely focusing on equity release, one in four had considered downsizing, while one in five contemplated using their savings. Others (17%) looked at working longer and 19% considered taking out a personal loan.

The research found that those who did not take out equity release were more likely to look at working longer, downsizing and using their savings.

Commenting on the research, Key Later Life Finance chief executive Will Hale says: “Despite initiatives such as automatic enrolment, increasing numbers of people are finding that what they have saved into pensions and other investments is simply not enough to allow them to achieve their wants and needs in later life.” 

“Therefore, it is not a surprise that the Standard Life Home Finance research released today highlights that the desire for a better quality of life in retirement and the need to manage a funding shortfall is driving customers to explore equity release as an option.”

“That said, it is interesting to note that many customers had already started considering options such as downsizing or working longer to make up the shortfall before speaking to a financial adviser. Rather than being a knee-jerk reaction, taking out equity release is a choice which is made after significant consideration and with the support of a qualified, specialist adviser.”

“For many people, their home is their largest asset, and it only makes sense to consider how this could benefit their retirement finances and/or to support their wider family.”

Back to News Articles