8 - PROTECTION INSIGHT
How housing wealth can help a generation saddled with debt
The role of the financial services industry in helping over 55s achieve financial security and stability has never been greater than it is today. For the third year in a row, we have commissioned research from the Centre for Economics and Business Research (Cebr), and the results paint a clear picture of rising debt levels and lower income streams among retirees. This combination of factors means many are facing difficult ongoing decisions about how to manage their income, assets and outgoings during retirement; a period of time that is now longer than ever before. It is here that the later life lending sector specifically can play a vital role. As over 55s look for financial solutions to combat shortfalls in pension provisions, pay off debt and manage the escalating cost of everyday living, now is the time to highlight the continued possibilities of housing wealth in helping to meet these challenges faced.
still have a mortgage on their property, with 68% of these individuals having a repayment mortgage and 23% worryingly an interest-only mortgage. The industry needs to work collectively to break down the perceived barriers and develop products that are attractive, flexible and meet the needs of an increasingly diverse population. It needs to promote the message that wealth- based housing products can provide the financial stability that many older people are in desperate need of. The retirement landscape is changing; people are spending longer in retirement than ever before and the later life lending industry must ensure it does all it can to offer products that meet the changing financial needs and circumstances of today’s retirees.
This research has found that not only are many people facing significant financial challenges in retirement, but forecasts suggest that by 2029 the total value of debt for people aged 55+ will reach £548 billion. While a growing number of older people are carrying secured and unsecured debt into their retirement as part of a deliberate asset management strategy, more are doing so to simply make ends meet. The report shows that income levels are continuing to fall with age, with many 65-74 year olds estimated to have just £3,100 left at end of the year to save, invest, or use for future spending. This is the second lowest amount of income left after expenditure of all age groups, after the under 30s age group, and adds credence to the belief held by almost half of over 55s (48%) that they do not have enough savings to cover an unexpected £5,000 bill. A number of factors are driving these rising debt levels. As first-time buyers are getting on the property ladder later and house prices have significantly increased over the past 15 years, mortgage debt has also risen. This has resulted in not only higher mortgage values that borrowers are spreading over a longer period, but people carrying mortgage debt beyond traditional retirement age. The Cebr research also reveals that 14% of households over the age of 55
Dave Harris Chief Executive Officer
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