Senior homeowners will need an annual retirement income which amounts to more than double of today’s average of £17,212.
According to a report released by the Equity Release Council and Key, it has been revealed that older homeowners will need an annual retirement income of £35,196.
However, the report found that mature homeowners are struggling or unable to increase their pension pots because of the challenges of rising living costs (30 per cent), prioritising mortgage repayments over pension savings (24 per cent), supporting their dependents financially (22 per cent) and lower incomes prevent people from saving more (24 per cent).
David Burrowes, chairman of the Equity Release Council, said:
“With the UK’s population ageing rapidly, the scale of this issue is only set to become greater.
“An increasing number of consumers must make their pensions savings last over longer retirements with property wealth fast emerging as a viable solution to help meet this funding challenge.
“Our report emphasises the pension pressures faced by many across the UK and calls for property wealth to be better considered and integrated into the advice process.
“A single-product solution to retirement planning is no longer fit for purpose. We must break down the silos that create tunnel vision when it comes to later life financial planning.”
Worryingly, two regions in England, Yorkshire and Humber has the biggest gap, with homeowners enduring a £27,723 shortfall – between what they think they will need, income wise, later in life and the actual retirement income they will receive.
While 31 per cent of homeowners have saved more in their pension pots over the last 12 months due to paying off their mortgage. Of those who are still paying off their mortgage, almost half (44%) have reported that this has or probably will hinder their pension savings becoming adequate enough to live on.
As the social care crisis continues with a bleak outlook, a new report has been released warning that unless the Government takes strong action the UK Care System will collapse by the end of the decade – this presents a quandary for older homeowners as to whether to deplete their pension, sell their house or use the equity in their homes to fund their care costs.
The report which was undertaken by Irwin Mitchell and the Centre for Economics and Business Research (Cebr) reveals a damning position for UK’s Social Care System. Former pensions minister Ros Altmann has described the social care crisis as “the biggest failure of social policy in our lifetimes” following the release of the report.
At the launch of the report, Mathieu Culverhouse, partner at law firm Irwin Mitchell urged everyone to take matters into their own hands wherever possible and said:
“We have been waiting for this mythical green, white paper or whatever kind of proposal whatsoever”
The report enclosed recommendations and calls for action to stop the potential devastating collapse of the UK Care System by 2029.
Also, at the launch, Henry Tapper, Age Wage chief executive added:
“Too often events like this simply pass the buck to government but those presenting, and chair Ros Altmann, focused the conversation back to what people can do regardless of government.”
In discussions at the launch there was an urgency over the need for financial planning and Kelly Greig, head of later life planning at Irwin Mitchell said:
“The only way to do this is to have a proper financial plan that is individual to you from the outset.”
Greig also felt that the auto-enrolment scheme was concerning as it gave off the wrong message to those employees who had enrolled in the scheme – as it leaves them thinking their minimum contributions were adequate enough to fund care later in life.
Which followed with Altman saying that it is “not even going to be enough for a pension”.
In addition, with cyber crime ever prevalent in the legal industry, according to a report published this week, fraud is costing the UK’s pension sector an estimated £6bn annually.
The new research was conducted by national audit firm Crowe and University of Portsmouth Centre for Counter Fraud Studies.
Broken down the £6bn figure splits into private pensions losing £4.9bn and government and public pensions losing £1.1bn to fraud.
The report finds that all businesses are susceptible to cyber crime, however, the pensions sector appears to be behind other sectors in terms of fraud and cyber crime.
