The cost-of-living crisis has been a recurring topic in UK headlines. While much has been said about how it affects new homeowners, the older generation hasn’t received as much attention. So, what does this mean for our older homeowners?
According to Ben Waugh, Managing Director of more2life, the cost-of-living crisis is significantly affecting older homeowners, even as inflation rates start to decline.
“Older homeowners can be vulnerable for reasons beyond financial hardships,” Waugh observes. Being on a fixed income reduces their ability to adapt as the prices of goods and services increase.
However, not everything is grim. The robust housing market means that many older homeowners have considerable equity in their homes. This equity is an advantage they hold, one that younger homeowners may not yet possess. But Waugh stresses the need for professional advice for those contemplating leveraging this equity.
“Advisers play a crucial role in explaining if equity release is right for them and in finding the most suitable product,” he points out.
Debunking Myths: Are Older Homeowners Immune to the Crisis?
There’s a common misconception that older individuals are unaffected by the cost-of-living crisis, mainly because many have cleared their mortgages. Waugh advises caution against such oversimplifications.
“It’s not universally true that all older people have no mortgage commitments,” he remarks. For those older homeowners who still carry mortgages or other debts, the fixed nature of their income can be a burden.
Furthermore, Waugh notes that the financial situations of older homeowners can be complex. Some support their younger family members by contributing to their mortgages. Others may rely on savings due to insufficient pension incomes, or they might distribute financial gifts as a strategy to navigate future inheritance taxes.
“During turbulent economic times, these factors can make their financial standing quite fragile. It’s essential not to overlook the pressures they face,” warns Waugh.
Challenges that Lie Ahead
While younger generations grapple with financial hurdles, like saving for retirement or stepping onto the property ladder, older homeowners share these challenges.
“The older generation isn’t exempt from financial burdens. Many grandparents or parents support younger family members by providing funds for property down payments,” shares Waugh.
On top of assisting their families, older individuals are also striving to create sustainable retirement plans. Crafting such plans in a volatile economy becomes especially challenging once they’re on a fixed income.
Equity release could be a potential solution. It offers a flexible approach, enabling older homeowners to support family members, plan for the future, or even spend on personal desires like home renovations or holidays.
However, Waugh highlights a critical caveat.
“Equity release might not suit everyone. It’s imperative for consumers to seek expert advice before making such decisions.”