To answer that, we partnered with market research firm Bdifferent and held a series of focus groups with people approaching, at, and in retirement.
We found that views of equity release, and what part it can play in retirement, differ dramatically depending on individual circumstances. At one end of the spectrum we found the logical equity release borrower. Financially aware and informed, logical borrowers tend to own more valuable property and consider the pros and cons of equity release as part of a strategic look at their finances.
At the other end of the spectrum there are those borrowers searching for good value. Put off by the prospect of leaving an unpaid loan after they’ve died, and unconvinced by the benefits of equity release, value hunters simply see other options as better value for money.
All-in-all we uncovered five different typologies. That in itself provides real food for thought for advisers in discussion with customers about how equity release can provide income in retirement.
Firstly: there are often misconceptions to be put right. This is a rapidly evolving industry and we shouldn’t assume over-55s are au fait with the very latest products and services available.
Secondly: the fact there is no ‘one size fits all’ solution reinforces the need for equity release to be introduced as part of that holistic approach to retirement planning.
Thirdly: There are many barriers to using equity release cited. The earlier consumers are introduced to equity release, the earlier they can become comfortable with it and barriers can be overcome.
Many of the participants highlighted financial obligations that worry them, like looking after parents living into their eighties or nineties. Therefore, equipping people with an understanding of what their overall wealth – including property – can do for them in retirement is critical. More and more people are embracing equity release as part of their solution, and all the signs point to this continuing in the years ahead.
Alice Watson is product and communications manager at Retirement Advantage, Equity Release formerly Stonehaven
