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Planning for our future years

We Scots are getting healthier and living longer, and as medical advances continue to astound us those trends presumably will continue. But this great news brings with it questions for everyone – one of the main ones being “how will we fund a long period of retiral”. A recent report by the Department of Work and Pensions (DWP Workplace pension participation and saving trends 2006 – 2016) highlights that our savings levels through the new workplace pension schemes remain pretty modest.
Nigel Waterson, Chairman of the Equity Release Council, commented: -
“Despite the modest increase in the amount being saved, millions of workers are set to face a severe reduction in income when they retire.
This crisis has been exacerbated by the shift from defined benefit to defined contribution schemes. The Equity Release Council estimates that defined contribution pensioners making contributions of 8% throughout their working life, can expect to retire with a pension of only 15% of their final salary – only one fifth of the pension of an identical worker in a DB scheme”.
If you are reading this and in work – just think – are you actually contributing 8% to a pension – and could you survive on 15% of your current income? And if you are contributing less than 8% to a pension, how you would survive on less than 15% of your current income?
David Borrowman of Caesar and Howie comments “these are pretty scary questions for most people. But not facing up to the serious issues here is just not a sensible option. The problem won’t go away and delaying dealing with it won’t help either. If I were starting a career now – I’d try to get into the best pension scheme I could get into, and save as much as I reasonably could in it – whilst at the same time taking a mortgage to get on the housing ladder – and to stay on it. The value of homes in Scotland have increased substantially over the years and are forecasted to continue to do so. Consequently, if I were starting a career now I would hope to fund my retiral partly from my pension and partly from releasing equity from my home, if needed.
Equity release schemes are sensible flexible products these days. That’s just my personal view – which for example I have passed on to clients and family. But of course, it is not the only way forward and others might think differently and want to plan differently which is fine. But “plan” is the key word here – “no plan” in my view could lead to a very troubled retirement because I think it unlikely that the state pension alone will provide a comfortable lifestyle into the future”.
If you would like to discuss any aspect of Equity Release, please call us on 01506 815 900 or email us now.

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