The Importance of Seeking Financial Advice

The current recessionary climate has encouraged people to think seriously about their long-term financial well-being and retirement planning; and not before time.

Recent research has revealed that many adults from all walks of life face future financial hardship unless they seriously start to plan ahead. Moreover, over one in ten adults expect to delay their retirement by as much as five years. In addition, 41 percent of those adults over-55 would be delaying their retirement.

Financial pressures are growing for the millions of retired pensioners who, despite their retirement planning, still struggle to meet increasing day-to-day living costs.

The need for financial advice has never been greater, yet a worrying number of people are putting their heads in the sand over retirement planning. Further studies carried out revealed that more than half of adults in Britain have never sought advice from a financial adviser, whilst one in eight relied only on family and friends for advice.

This is a worrying trend, given that current economic woes are set to spark a growth in the number of retirees turning to equity release to supplement their pension. As such, there are two main ways of using equity release: by incorporating a home reversion plan or lifetime mortgage into their retirement planning, additional income can be accessed by homeowners and used for all sorts of purposes.

Home reversion plans work by allowing you to sell all or part of your home to a home reversion provider in return for a cash lump sum or a monthly income. What’s more, there is a guarantee that you can stay in your home until you move out or pass away. Whilst, a lifetime mortgage allows you to retain full ownership of the property and borrow against the value of the property. And when the house is eventuality sold, the lifetime mortgage provider is then repaid.

For those people considering equity release, whether a home reversion or lifetime mortgage, it is essential that they seek independent financial advice. They would also be wise to consider equity release plans from members of the industry body, SHIP, which represents the majority of all equity release providers.

Increasing numbers realise that this is a feasible way to get the most from their retirement planning. A recent equity release study showed that, when consumers were asked who they would turn to for advice if considering equity release – perhaps surprisingly – building societies and banks were cited as the most popular source of advice. Solicitors came a close second, followed by financial advisers and accountants. Interestingly, solicitors are more highly favoured by women than men, whilst accountants are preferred by men more than women.

The recent equity release study also showed that the majority of people prefer to seek advice face-to-face, with over half of all consumers surveyed preferring to receive this advice in an office rather than at home. Only an extremely small proportion chose to be given advice over the phone.

As we see growing numbers of people incorporating equity release into their retirement planning – through home reversion and lifetime mortgages – it is important that they consider seeking financial advice from a suitably qualified equity release specialist.

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