Remember 2019, when life was normal and we could plan ahead with a degree of certainty, visit a new restaurant or enjoy the excitement of a spontaneous weekend away?
When venturing beyond the front door was a natural, perfectly straight forward thing to do.
When a jab was something you saw in a boxing ring.
When traffic in North Wales and Cornwall flowed relatively freely.
When the cost of a week in a sub-standard mobile home facing the North Sea in March didn’t run to four figures.
When each time you telephoned an organisation, it wasn’t answered with that frustratingly ubiquitous message which begins, “Due to the large volume of calls we’re receiving…”.
Thankfully, it feels as though we’re on the cusp of returning to a form of pre-2020 normality, to a time which justifies throwing – and/or attending – the type of loud, boozy party at which you dance until 4am. A return to the comparative normality of 2019 will also trigger the implementation of plans upon which millions of people have been working over the past 18 months, preparing for a time when all remaining restrictions are lifted.
It’s expected that many more folks than normal will voluntarily withdraw (retire) from the workforce and spend their time instead doing those things they’ve yearned to do for years.
Of course, there’s absolutely no reason to wait until you’ve clocked off for the last time before you start doing what you’ve really wanted to do.
Conversely, there are tens of thousands of people in their sixties who enjoy what they work at and would prefer to delay retirement; most continue to get paid for their efforts. If you can do something similar, then I would strongly recommend you do and supplement your pension while you’re at it.
However, the overwhelming majority of folks are keen to enjoy their post-retirement lives to the full as soon as possible, hence they prefer a clean break from work. This is entirely understandable.
In that now tantalisingly close post-pandemic world, if you’re going to travel across Europe, take a road trip along America’s Route 66 or embark on a world cruise, it’s a tad difficult to simultaneously hold down a job.
Ah, but there’s a catch as those who have been busy planning for life beyond restrictions have discovered.
Retirement can be expensive, especially in the early years when we’re relatively fit and healthy and capable of swanning off to the far corners of the Earth. This is a period when we tend to spend heavily, enjoying the fruit of our labours.
Very few retirees have sufficient financial resources to ensure they can spend great tracts of their retired lives hopping on-and-off planes or cruise liners. Travelling is not only expensive, it can be tiring too – even when you’re mooching around in luxury.
It follows that a combination of state pension, savings and a company (or private) pension may be insufficient to cover the cost of our most ambitious retirement plans.
Traditionally, people downsize before executing their ‘later life’ plans, effectively freeing-up a proportion of the capital built up in their family home and moving to more modestly-sized accommodation.
But not everyone wants to leave their home, nor live in a smaller place, even though they too wish to explore the incomparable joys of retirement; what can they do instead?
A growing number of people, keen to discover whether 60+ really is the new 35 (as many commentators declare), have effectively plugged gaps in their existing or projected pension income by making use of a wide range of equity release plans which allow them to release tax-free funds built up in their homes, often over many years.
There are many misconceptions about equity release, mainly due to a lack of available information. However, these products have evolved under the guidance of the Equity Release Council and FCA to the extent that their flexibility allows you either take a lump sum, or a series of drawdowns or even plans that provide a fixed monthly income direct into your bank account, all tax free.
Moreover, for a significant proportion of people, perhaps the most attractive feature of equity release is the fact that once funds are withdrawn from the home, usually in the form of a ‘lifetime mortgage’, there is no compulsion to make any monthly payments to repay either the interest accruing, or the amount borrowed. (Typically, this is all repaid upon death or a move into long-term care.)
Equity release is a serious matter and before taking the plunge and topping up a pension with tax-free cash, it’s important for those considering its appeal to take professional advice.
You don’t get many opportunities to plug gaps in your pension, but equity release is an increasingly mainstream option for people who are committed to enjoying their post-pandemic life – and retirement in particular – to do just that.