Retirement aspirations and financial planning drive clients’ choices for freeing up capital, with nearly a third (32%) wanting to enjoy life more as they age and 28% focusing on planning financial, according to the latest research from Standard Life Home Finance.
The research took into account the opinions of 418 people who had subscribed to the equity release and 94 who had refused to continue after inquiring about the products.
It revealed that 11% said family and friends needed their support, while 17% said they had always known their pensions and savings were not enough.
Another 11% revealed that they had considered their options when they realized that 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 that derailed their retirement plans, such as a divorce, layoff or illness.
Meanwhile, 17% who did not take out equity release said their need for extra cash was driven by a life event.
The research found that this cohort was also more likely to say they had always known their pension and savings were not enough (20%) and that they were keen to provide for their family and friends. friends (15%).
Kay Westgarth, head of sales at Standard Life Home Finance, said: “While historically some people have been comfortable classifying capital release as a product of last resort, speaking to customers who have subscribed to capital release or who have seriously considered this option, you can clearly see that this is not always the case. »
“Instead, it’s often used as a financial planning tool, a stepping stone to realizing retirement ambitions, or an opportunity to support extended family,” adds Westgarth.
After identifying a financial shortfall, 40% of over-55s who subsequently subscribed to Capital Release initially felt thoughtful about their finances and took the time to consider their financial options.
Almost done in five (19%) felt confused because they didn’t know how to get the funds they needed, and 18% were worried because they knew how much money they needed but didn’t have it. Only 3% were confident when they realized they would need extra money to meet their needs.
Rather than just focusing on freeing up equity, one in four had considered downsizing, while one in five considered using savings. Others (17%) plan to work longer and 19% plan to take out a personal loan.
The research found that those who did not subscribe to the equity release were more likely to consider working longer hours, downsizing and using their savings.
Commenting on the study, Will Hale, Managing Director of Key Later Life Finance, said: “Despite initiatives such as auto-enrollment, a growing number of people are finding that what they have saved in pensions and other investments is not is simply not enough to allow them to achieve their desires. and needs later in life.
“Therefore, it’s no surprise that 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 gap is driving clients to consider capital release as an option.
“Having said that, it’s interesting to note that many clients had already begun to consider options such as downsizing or working longer to make up the shortfall before speaking to a financial adviser. Rather than being an instinctive reaction, equity release is a choice that is made after careful consideration and with the support of a qualified and specialized advisor.
“For many people, their home is their greatest asset, and it makes sense to consider how this could benefit their retirement finances and/or support their extended family.”