Is old age unaffordable for the average Brit?
The necessity of planning for retirement is drummed into us from the day we start work. People are encouraged to take out a private pension plan and save for the future.
This advice is all well and good. But to someone in their early twenties, retirement seems a long way away. Paying the bills, enjoying life and saving for a deposit on a house can all seem more important at the time. But investing in a pension scheme has just become even more essential.
People in their forties are being denied a mortgage if they do not have a private pension.
It is not unusual to take out a mortgage later in life. This may be to get a better deal on interest, to move house or to free up some money for a project. The new loan can often extend into a person’s retirement.
Now, two major mortgage lenders are refusing to lend into retirement unless the applicant has a private pension.
This is the case even if the applicant is financially secure and has a large deposit.
The equity they have in the property is also irrelevant. If a borrower retires within ten years of taking out a loan, their anticipated income in retirement will be considered when assessing affordability.
Another added pressure when planning for retirement is the fact that many older people may now have to pay for their own care needs. For some people, this can even mean having to realise their assets or even their home.
Cathy McCracken, partner at Birchall Blackburn Law and an expert in Private Client services for the elderly said:
“People often come to us with concerns about their future financial situation particularly if their health is failing. Taking the time to properly plan for retirement early gives peace of mind to both our clients and their families. Many people say that just knowing they have a plan is a weight lifted.”
A lot more people are now living into their eighties and nineties.
Even becoming a centurion isn’t considered the achievement it once was.
According to the Office for National Statistics, there will be 3.5 million people aged over 85 by 2035. Many people of this age remain mobile and able to look after themselves.
However, many of us do suffer health problems as we age. The associated costs come as a surprise to a lot of people and can cause financial distress.
It is difficult to think of ourselves or our loved ones struggling financially in our old age. Possibly having to sell assets or the family home to fund health care and support doesn’t bear thinking about. (That said, the rules are changing so that you won’t be required to sell your home in your lifetime to fund care)
At Birchall Blackburn law, our Private Client experts work with you to review your full financial picture. Contact us on 0800 614 722 or 0333 321 2192 from a mobile to arrange an appointment. This could take place at our local office or we can visit you at home if you prefer.