Many over-55s would struggle to find £5,000 to meet an unexpected cost such as a boiler breakdown as they struggle to bridge the income gap in retirement.
According to a study, a quarter of people in this age group feared the increasing cost of living would mean they would be living beyond their means this year.
A third said their expenditure exceeds their income and 68% of them have dipped into their savings to help plug the gap.
Yet, for many savings were not option, as half of over-55s said they didn’t have cash savings to cover an unexpected bill of £5,000.
One in five would not be able to cover the cost of an unexpected £5,000 bill by any means at all. And 14% would have to consider taking out a loan to do so.
The survey was carried out by equity release provider more2life which said the results highlighted how later life products, such as equity release, were becoming a very realistic option for many people in this age group who owned homes.
Dave Harris, CEO at more2life, said: “Fewer over-55s are enjoying a financially carefree retirement, a fact that we can in part attribute to smaller pension pots, greater financial responsibilities and longer retirements.”
He added: “This research highlights that for some people retirement is far from relaxing and they are one large bill away from real financial hardship.”
Considering all assets at retirement
With so many people dipping into savings or even taking out loans in retirement, more2life said it was important people were encouraged to consider all their assets at retirement.
Harris said solutions such as equity release were set to help an increasing number of older homeowners boost their income with nearly £11 million of property wealth unlocked per day between July and September 2019.
Anyone considering equity release must first get independent advice to ensure this is the best option for them.
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To read this month’s Q&A or to submit your own query, click here.
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