Saga sees trouble ahead for retirees

09/03/2009

Britain's over-55s are facing severe reductions in the size of their pension pots due to the credit crunch - and could be forced to seek out alternative ways of boosting their retirement income.

This is the main finding of new analysis from Saga, which also suggested that increasing numbers of pensioners will be looking to take out an equity release loan against their property.

Stock markets around the world have plunged by over 50 per cent since the onset of the crunch in mid-2007.

Just last week, the flagship London index, the FTSE 100, dropped to its lowest level for six years.

This is bad news for people approaching retirement age, as it is more likely than not that their scheme is heavily exposed to the stock markets.

Saga's Alex Edmans commented: "For those retiring in the current recession who have defined contribution schemes, it is almost certain that their pensions funds would have fallen over the last year and thus the income available to them in retirement will be reduced.

"If possible, it may be necessary to defer retirement if the likely retirement income would be insufficient to maintain their desired standard of living. For others, equity release may be a suitable solution to help provide the financial security they require."

Kevin Still, EuroDebt director, added: "We are seeing more and more over-55s approaching us for debt advice where a major reduction in disposable income, lack of liquid savings, on-going mortgage commitments and high levels of unsecured debts are contributing factors. It is not uncommon for people to have to take-on part-time work to bolster their household income well into their seventies.

"Deferring retirement and looking at unlocking long-terms assets like equity in the property are becoming viable options just to make ends meet rather than maintaining standards of living. It is inevitable that it will take both the property and investment markets a long time to recover from the current recession, so any decision needs to take this into account, especially with regard to the long-term impact of lump sum equity release."

The Resolution Foundation found recently that Britain's over-65s had around £500 billion of equity built up in their homes.

Tags; Income Worries and Debt, Retirement Money Problems,

Regional Debt Advice; Debt Help London,

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