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How property wealth might close the retirement funding gap?

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The gender pension gap could be as much as ₤ 108,130 for single women in retirement. That’s according to more2life’s most current Later Life Lending report.

The exact same research study also revealed that, when life expectancy is thought about, the retirement income shortage could rise to ₤ 186,120 for ladies who are married or in a relationship.

When the State Pension age was increased once again in early October, the enduring issue of the gender pension gap resurfaced. Those born in between 6 October 1954 and 5 October 1960 will now need to wait up until they turn 66 before they can start claiming their State Pension allowance.

Groups such as the Women Against State Pension Inequality (WASPI) have argued previously that modifications to the State Pension age unfairly affect ladies, who usually face the challenge of funding a longer retirement on much less earnings than men.

As exposed by more2life’s research, the bulk (73%) of women over the age of 54 expect to count on their State Pension in retirement.

With the new State Pension paying retired people up to simply ₤ 175.20 per week– equivalent to less than ₤ 10,000 per year– and more increases to the State Pension age expected, it is clear many women will require to look beyond state provision and think about how assets such as property can assist them fund their later years.

The gender pension split

The difference in average retirement income between women and males stems primarily from the gender income gap.

As earnings generally form the basis of an individual’s pension, just how much a person is paid over their working life has a direct influence on their pension earnings.

In 2019, the government discovered the gender pay gap had actually reached 17.3%, implying that for every single ₤ 1 earned by a man last year, a female would have been paid just 83p for the very same work. This implies that numerous ladies might have a hard time to save enough for later life.

The wage gap is typically intensified by the choices ladies typically face throughout their working life.

Typically coming from a desire to take care of family, lots of taking time out of work. The severe reality is that even short pauses in pension contributions can develop major long-lasting distinctions in the worth of a retirement fund.

For example, a woman who has 2 kids in her early thirties, takes a full 2 years of maternity leave and go back to work part-time after her first child could lose out on in between ₤ 20,000 and ₤ 50,000 in retirement savings.

The effect that career breaks can have on a female’s State Pension allowance, in particular, is similarly worrying.

To qualify for the full allowance, an individual should have accumulated 35 years’ worth of National Insurance (NI) contributions. Offered that ladies are more likely than men to take time out of work, this simply might not be possible for some.

It’s not just that lots of females will now have to wait longer to claim their State Pension allowance, it’s likewise that some won’t qualify for the full pay-out either. When they reach later life, this might leave thousands in an even worse financial position.

How do we fight the retirement income gap?

To deal with the retirement income gap, women will require to look beyond the State Pension when developing a later life strategy.

Government support nowadays is focused on avoiding individuals from falling through the cracks, however, to accomplish the aspirational retirement numerous desire, it is essential that ladies consider how other assets can help.

Property wealth has actually become a progressively popular method for females to boost their retirement income over current years. House owners aged 55 and over can unlock their built-up housing wealth by taking out an equity release plan.

There are lots of kinds of equity release plans– the most popular of which are called lifetime mortgages– providing customers flexibility and control over how they access their housing wealth.

For instance, consumers can decide whether they would choose to unlock their housing equity through a lump sum or a drawdown strategy. Lifetime mortgages also come with included features like downsizing protection, which can be useful for people who are likely to move house.

In order for females to realise how assets such as property can give them a financial boost in later life, consulting with a professional equity release adviser is crucial.

Approaching an equity release consultant sooner rather than later on will provide reassurance and confidence to consumers, particularly those who are uncertain about their options, educating them on how various assets can be used to form a holistic financial plan for retirement.

Eventually, by utilising complementary assets and speaking with a qualified professional, more ladies will have the ability to prepare better for retirement and step into later life with financial confidence.

Source: Stuart Wilson corporate marketing director of more2life

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Equity Release Guru is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register \(http://www.fsa.gov.uk/register/home.do) under reference 610205.

In using this website I give express consent to Equity Release Guru to call me on the number provided from time to time. Calls may be recorded for training and quality purposes.

This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a Personalised illustration.

Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt.

Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,295. Our adviser will talk through the setting up costs of a lifetime mortgage before you make any decision to proceed.

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