If present economic issues have shown us anything, it is the relative frailty of systems to which we have previously ascribed a great deal of trust. The cost-of-living crisis saw many regular living costs increase dramatically, far outstripping wage increases or the natural growth of savings; it was an illustration in real-time of how quickly our hard-saved money can effectively lose its value.
The crisis also brought about a number of unavoidable emergency costs for households, causing many to put their long-term savings on hold or even chip into them just to stay afloat. Whatever reason there may be, your own financial planning for retirement may not quite have gone the way you’d hoped. Though you have some savings, a modest pension and State Pension income to look forward too, even together these might not be enough for you to maintain your ideal post-retirement standards of living, let alone afford those once-in-a-lifetime trips you’d promised yourself.
Luckily, there are some alternative routes by which you can fund your retirement, whether in search of capital for accessibility adjustments to your home or simply a bit of spending money. Here are three different ways you might supplement your retirement.
Equity Release
The first method is equity release, a form of financial product that enables you to effectively access part of your property’s value, as a long-term loan that is fully repaid either from your estate, or on the sale of the property. Various factors impact how much you might be able to access, and an equity release calculator can give a good ballpark figure based on these factors. The main caveat is that you must be over 55 to engage in an equity release scheme, meaning early retirees will have to wait to avail of such a product.
Interest-Only Mortgage
Interest-only mortgages are another form of retirement-age financial product, and which also bear some similarity to the form of the most common equity release scheme – the lifetime mortgage. Interest-only mortgages are different, though, in that you mortgage your property and then pay solely the interest on a monthly basis. The result is that, at the end of the agreed term, the amount to pay is the same as the amount borrowed.
Downsizing
Finally, there is a practical – albeit effortful – measure which can inject your retirement finances with a little extra cash: downsizing. As a retiree and likely empty-nester, you may find your home is too large to justify keeping. There is also the matter of declining health in the later stages of life, where parts of your larger home may become functionally inaccessible. Downsizing to a smaller property allows you to minimise the space you need to heat and clean, while pocketing the profit made on your larger home.