The long-tail results of Covid’s impact on the economy are becoming more apparent each day, but the issue of discussion right now is retirement. The discussion is not so much when it is possible but now if it is possible at all, as 2.6 million people over 50 believe they will have to work indefinitely due to the financial hardships experienced during the pandemic.
The worst level that unemployment reached in the UK last year was 5.1%, the highest since 2015. While the rate is decreasing (the latest reports suggest that unemployment is currently at 4.9%), many who were preparing for life outside of the workforce are still feeling the effects.
According to the latest research from Legal & General, over 1.4 million people aged 50 or over are having to adjust their retirement plans in order to account for the financial losses they have made over the past year. The adjustments appear to vary from working for an additional three years all the way to working indefinitely. Many people over 50 experienced a loss of around £500 per month, over 20% of the average monthly household income of £2,084.
With such a significant hit on pensions and the minimum age that people can access their private pensions increasing from 55 to 58 in 2028, any notion of retirement looks to be a yardstick that is so often being moved further away. Even though the final stretch of lockdown and the pandemic is in sight with restrictions being lifted and vaccinations being rolled out at an impressive rate, the long-lasting effects will be felt for years, as so many over 50s are experiencing. The promise of a happy and relaxing retirement and the prospect of working indefinitely becomes all too likely.
Getting your retirement plans back on track
Any impact to your retirement plans could seem terrifying at first. What you had been working towards for decades now seems to be a distant memory. This is not actually the case though.
There are a number of ways in which you can get your retirement plans back on track by freeing up money. These include:
One of the hardest things to manage with debts is the sporadic nature of payments being needed, meaning that any planning you make will probably be outdated by the end of the week.
Being able to put all of your debts into one manageable sum allows you to focus all of your energy and debt management into one place. While you will have a better grip on your finances, there is the chance that you may end up paying more over time. As with anything to do with your retirement, you should speak to a financial expert before making any major decisions.
Lifetime mortgages are a type of equity release product that can help those approaching retirement free up the cash in their home. It is a very similar process to remortgaging however it is only available for those over 55.
The potential issue that could arise with a lifetime mortgage - much like other equity release products aimed at the older generation - is that the burden of paying it off falls on your family when you die.
Since 2015, the way people could access their pension saw a major change. Annuities became a thing of the past and having a more comprehensive control over your pension became more commonplace.
This change means that (if you would like to) you can withdraw your entire pension in one swoop (although this will result in a tax bill that can often reach up to 40%) which allows people to use their pension how they see fit. While this can be quite an immediate way to access money, the concept of accessing all of your money can be overwhelming and risky. As always, discussing any financial moves with an expert is crucial.
Spring has written extensively about preparing for retirement. You can read more about planning for your future here.
A solution that works for you
There is, however, a growing trend, seeing people approaching a We Buy Any House service such as Spring’s in order to free up funds and make retirement more attainable.
Spring, as the largest home buyer in the UK, have helped many of our customers get their retirement plans started and onto the next stage of their lives. Our service provides a simple one stop solution to selling your home with no waiting to sell on the open market.
Our trusted and transparent pricing allows you to know what price you will get and when, leaving you free to financially plan your next move. Having this opportunity can take you a large step closer to retirement and give you the financial means to live your best years how you wanted to.