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Are you financially ready to retire?

Your Money
Tuesday 20 April 2021
Being ready to retire isn’t simply about being emotionally prepared to clock out from work once and for all. A happy and fulfilling retirement also rests on being financially ready.

So how can you know if you’re financially ready to retire? Some of the answers to these questions could help:
Do you have a very clear idea of your financial needs and commitments in retirement?

Will you still have an existing mortgage on your home to repay into retirement? If so, will you be able to manage the repayments, as well as maintenance expenses?

Have you created a retirement budget, factoring in any pensions or benefits you may be eligible for?

Have you thought of the possibility of unexpected expenses, such as needing a new car or a boiler breaking down?

How could property wealth help support retirement?
Selling and moving to a smaller property is one obvious option to access the wealth in your home. However, a lifetime mortgage, the most popular form of equity release and a loan secured against your home, allows you to unlock some of the tax-free cash from your home while staying put.

Last year saw homeowners over the age of 55 take advantage of the lower interest rates on offer, with over 72,000* customers taking out equity release. It wasn’t just the interest rates that appealed, though.
Taking control
Increased flexible product features has also fuelled the rise in popularity of equity release. Plans now come in all shapes and sizes and this rise in available options means that those taking out equity release can ensure a more tailored plan suited to their circumstances.
Some plans include features such as:
Voluntary partial capital repayments, meaning you can reduce the size of the loan on which interest is charged.

Drawdown plans, allowing you to take out a smaller initial amount of tax-free cash and “draw down” money later in stages.

Inheritance protection, guaranteeing that a percentage of the future value of your home will be left to your loved ones.

Downsizing protection, ensuring that if you need to move to a property that doesn’t meet your lender’s criteria after five years of taking out a lifetime mortgage, you can pay the loan back without an early repayment charge.
“Since taking out equity release, we’ve been able to reduce our working hours and we’re now planning to retire”
Lancashire based couple Spencer and Helen Carroll were looking for a way to pay off their existing mortgage and other niggling debts before entering into retirement.

The couple who both work within the recovery unit at their local hospital, carry out the admirable after-care for patients who have undergone surgery.

“We have always wanted to bring our retirement age forward and especially now as we suffer from arthritis,” explains Spencer.

“We have looked into downsizing to raise the money but we didn’t want to move away from our grandchildren.

“Although we are very happy in our house, it was in need of some major repairs before we could be ‘retirement ready’.”

Unsure where to turn, the Carrolls spotted one of Key’s adverts and were keen to find out more information about how equity release could help them.

“We arranged to speak to an equity release adviser who explained the whole process. For us, it seemed like the best of both worlds.

The couple discussed releasing the equity from their home with their son, adding “after talking it over, we came to the conclusion it would be the best option for us because it fit our every need.

“Since taking out equity release, we’ve been able to reduce our working hours and we’re now planning to retire. We have paid off our existing mortgage and debts which has taken a big weight off our shoulders.

“Thanks to equity release we are now entering retirement happy and relaxed with everything we need. We would not have been able to achieve this without releasing the equity from our house.”

Want to find out whether equity release could help boost your retirement finances? Download our guide here

Things to consider
  • The cash you release from your home is tax free
  • With a lifetime mortgage, typically there are no monthly repayments to make as the loan plus roll-up interest is repaid when the plan comes to an end
  • You should always think carefully before securing a loan against your home
  • You always remain the owner of your home with a lifetime mortgage
  • You can guarantee an inheritance with some of Key’s plans
  • Key’s plans come with a no-negative equity guarantee, meaning you will never owe more than your home is worth
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • Key Equity Release offer lifetime mortgages only which is a loan secured against your home.
  • Key’s equity release advice relates to our range of Key-branded products and our fixed advice fee of £1,299 is only payable on completion, so you can find out if it’s right for you without it costing you a penny.

Page last updated: Tuesday 16 April 2024