10th September 2015
A significant 32%, or almost a third of UK retirees, are now living on less than the minimum wage shows new research from LV=.
With Britons living longer and retiring on smaller pension pots, funding retirement poses a very real challenge for many.
But the insurer’s analysis found that despite the amount of retirees living on such a small income, more than two thirds, at 68%, have untapped property wealth which they may not have even considered, or do not realise they could be accessing it to fund a more comfortable lifestyle.
According to LV=, two in five of those aged 65 and over – or 4.8m pensioners – have ‘gone without’ due to tight budgets. Some 25% sacrifice items such as holidays abroad, while 16% dispense with a new car and 15% avoid dining out.
One in twenty, at 5%, cannot even afford to buy birthday and Christmas presents for friends and family. Regionally, retirees in the South West and East of England are most likely to go without, with those in Wales and Scotland, at 5% apiece, most likely find it a struggle to keep up with their utility payments.
Of those retirees whose income is less than the equivalent of earning the minimum wage, the number ‘going without’ rises significantly to 54%. Furthermore, 15% cannot afford to replace household goods and over 150,000 are struggling with their utility bills.
However LV=’s research shows that the majority at 83% of over-65s own their home and are sitting on an average of £235,750 in property equity, which they could access to have a happier and more comfortable retirement.
But despite this, only 7% have unlocked the capital in their property to help fund their retirement. Nearly a fifth, at 17%, incorrectly thought they would pass on debt by using equity release, while 24% mistakenly thought that their equity release borrowing could exceed the value of their property.
John Perks, managing director of retirement solutions at LV=, said: “It’s deeply concerning that so many older people are struggling in retirement, often going without life’s essentials but it doesn’t have to be this way. There are many options available and using untapped housing wealth to supplement other incomes is a route worth considering, as it allows you to free up capital and afford the retirement you want.
“It is unfortunate that misconceptions about the way retirees can use their property to plug an income shortfall persist as, in the right circumstances, equity release can be used to help afford retirees a better, more comfortable standard of living. We would always recommend that someone seeks advice from a specialist before taking out equity release.”