The slide of interest rates to historically low levels has seen more than 8 million pensioners’ monthly income fall by nearly 25% over the last 12 months, according to figures from SHIP (Safe Home Income Plans), the equity release trade body.
SHIP’s figures show that, in April 2008, the average pensioner received £158 per month from their savings. This was in addition to their pension and accounted for 28.62% of their total income.
The fall in base rate has seen that income slide to just £16 per month, or 4% of their total income.
With perhaps little chance of bases rates rising to last year’s levels soon, pensioners need to consider alternative sources of income. On such possibility for homeowners is equity release.
Equity release can offer a real solution to pensioners’ problems. For example, a 75 year old woman with a property worth £300,000 could release up to £900 per month for 15 years. This would more than cover her loss of income.
“One solution for those pensioners needing to boost their income is equity release. The over 60s can release some of the wealth tied up in their property and increase their retirement income substantially should they wish” said Andrea Rozario, Director-General of SHIP.
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