Communicating the changing shape of retirement funding

Retired woman

We’re always looking to work with clients and financial sectors that we really believe in, to live the Moreish purpose of harnessing the power of communication to help people achieve more financial freedom and security.

On one hand, the government is looking for ways to stimulate the economy following the financial strain left by the pandemic. On the other hand, the ageing population (65+ years) in the UK continues to grow (18.5%) – but almost half of retirees won’t have enough income to sustain their retirement lifestyle, which isn’t just damaging for them, but for the wider economy too. Furthermore, 77% of those approaching retirement have said that COVID-19 has financially affected or postponed their retirement date.

That’s why (in our non-advisory and humble opinion) it’s more important than ever to help people take a more holistic approach to later life finances – helping them enjoy happier days ahead whilst supporting the wider economy.

When we refer to holistic approach to later life finances, we’re mainly referring to the role of equity release. For those reading this article who aren’t familiar with equity release, it helps customers unlock the tax-free cash from their homes, whilst retaining 100% of the ownership.

And we believe that communication and education is fundamental in helping the equity release market reach it’s predicted annual business volume of £9.4bn in the next 10 years compared to £1.4bn currently.

Giving equity release the feel good factor

Equity release has had bad press in the past, from its pre-regulatory days 17 years ago, but it’s a totally different product these days with more flexible plans and no negative equity guarantees, and can only be taken out with a qualified and regulated financial adviser. That means it now has one of the highest customer satisfaction rates of any financial product. So we think it’s important to shine a light on all the positives to wider society too.

It can make a big difference to…

  • the economy – with £4.67 billion worth of equity being recycled into the economy in 2020
  • retirees – to get more from their retirement by boosting their income and/or see their family benefit without having to compromise on where they live
  • their children and grandchildren – to help them get on the property ladder or provide financial support through these difficult times following unemployment or a drop in income

What’s the other social economics behind the need to change

Traditionally, most retirees funded their retirement with state and private pensions, and savings – here are some reasons why this is changing…

  • The increasing volumes of retirees means the government can afford to pay less in state pension in real terms
  • People are living longer – there’s been a 5-year increase in life expectancy over the last 40 years
  • A 65-year old, say in the 1980s, compares very differently to a 65-year old in the 2020s and are far more active and want much more out of retirement.
  • It’s likely that a retiree’s biggest asset is their home. With decades of property price increases over-55s are sitting on £600bn worth of money tied up in their homes. And at the moment that equity isn’t being realized until they die – stagnating their lives, their children’s and the economy.

Doing our bit to change perception

Despite its increasing popularity, many financial advisers (and their clients) still turn their nose up at equity release thinking it’s only a product of last resort – but it’s use and benefits go far beyond what people initially think, including for high net worth tax planning, splitting money in divorce (another thing sadly on the increase post pandemic) and helping to get young and growing families (another more positive outcome of the lockdown 😉) onto or higher up the property ladder.

Yes, equity release may not feel like the most sexy financial product out there, when you’ve got cryptocurrencies and fintech innovation, but it’s role on society is of increasing importance. And like in many areas of the financial world, communication and trusted relationships are key. The greatest barrier to the growth of equity release remains customer awareness and understanding, leaving many retirees living in an unsatisfied retirement – and we want to help change that.

For a country so emotionally connected with home ownership (that doesn’t change with equity release by the way!) and the unregulated start to the industry which has now completely changed, we’re flying the flag with education within the financial services industry, with advisers and consumers, from the work we do with our clients.

If you’re interested in learning about how we’ve started the journey to change the perception of retirement funding and equity release in the industry, read about our Financial adviser’s guide to equity release referrals case study that we worked on with Key Partnerships.

Or see our retirement funding tool case study that we developed with Key Partnerships too, that helps introduce equity release as a later life funding option seamlessly to make retirement conversations more personal in minutes.

And if you’d like to collaborate on this journey, we’d love to hear your thoughts – get in touch!