Article date: 13 November 2007
New research released today by Norwich Union suggest that equity release is growing in popularity amongst the pre-retirement generation.
A survey of more than 1,600* people aged 50-66 commissioned by the company - a leading equity release provider - found that people approaching retirement were twice as likely to consider using such a scheme as their retired counterparts. One in 10 (9%) pre-retireds said they would probably take out an equity release product, compared to one in 20 (5%) people who were already retired.
Pre-retired people were also more positive about equity release products generally, with a third of pre-retired people saying that they might be a sensible option when older, compared to less than a quarter of retired individuals. A similar proportion (32% vs 26%) said equity release could be a sensible use of assets.
Of those likely to take out an equity release product, additional income was the main reason for doing so (38%). One in eight (12%) said equity release would allow them to be independent, while 6% said they would use the money to pay off their debts.
Willie Mowatt, director of post retirement products for Norwich Union, said: "The research shows there is generational shift between pre-retired and retired people as more people in their 50s and early 60s are considering the product as a way of funding their retirement. It's also reassuring to know that nine in ten people questioned were aware of equity release schemes.
"This is a positive step forward for the equity release market as it shows it is shaking off its tarnished reputation and taking its rightful place amongst the retirement planning portfolio. Fewer and fewer people can now rely solely on pensions to fund their later years, so it stands to reason that retirees are increasingly looking into other options."
The research also revealed that seven in 10 people surveyed would consider moving home to raise money if they needed to, showing further evidence that people view their homes as potential source of income. One in three even said they would consider moving to a cheaper home abroad to raise money for their retirement.
Of those who didn't want to move, nearly half (45%) said this was because they were attached to their home. One in six (16%) couldn't face the hassle of moving and 13% were put off by the cost.
Willie Mowatt adds: "While equity release may not be the answer for everyone, for some individuals it can be a simple, convenient path to a more comfortable retirement. It is therefore encouraging that there seems to be a growing acceptance of the product as a viable retirement solution."
An equity release policy will affect the amount of capital planholders are able to leave to their dependents and could affect any state benefits they receive. There are costs involved when taking out an equity release plan.
*The "At Retirement Monitor" carried out by Marketing Sciences in June 2007, interviewing 1641 British adults who were approaching or who had just passed state pension age (SPA). 841 were "pre-SPA" (aged 50-64 for males and 50-59 females) and 800 were "post-SPA" (aged 65-66 for males and 60-61 for females).
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Notes to editors:
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media