The growing gap between healthy life expectancy and life expectancy highlights the need for increased later life finance options, Key Later Life Finance, the UK’s leading equity release adviser, says.
Analysis of data from the International Longevity Centre (ILC) shows the gap between healthy life expectancy and life expectancy has extended to 11.7 years potentially increasing costs for people in later life.
Most recent data shows average life expectancy has increased to 82.2 years from 81.7 year while healthy life expectancy has only grown to 70.5 years from 70.1 years. As people live longer with health conditions many may need extra support which will need to be privately funded.
However, at the same time ILC figures shows average employment spans have dropped over that period to 31.1 years from 31.6 years limiting people’s ability to save for their retirement and ensure they have a sustainable income that can support them through all the challenges that later life may bring.
Key’s own data shows more than 10 million over-65s own their properties outright without a mortgage and have up to £2.944 trillion in property equity.
It believes this substantial property wealth could be put to use supporting older people with boosting their retirement lifestyle and providing a safety net when they face unexpected financial shocks such as those caused by ill-health.
Government data shows average pensioner incomes in retirement are currently £20,120 rising to £29,170 for couples. Care delivered in the home can cost around £25 an hour, so quickly eating into income, but can often be an effective way of maintaining independence
and quality of life whilst still providing older people with the support they require. In contrast, moving into a residential care home can cost as much as £1,400 a week.
Will Hale, CEO Key Advice, said: “People in later life can have complex and expensive financial needs and the impact of ill-health can make a major difference.
It is very welcome that people are living longer but healthy life expectancy needs to be considered as part of financial planning. Later life lending options are available but more people need to be aware of them and it is the responsibility of all advisers to take property wealth into consideration.
Lifetime mortgages enable money to be drawn down tax free which can be a sensible way for over-65s to fund retirement needs. However, everyone’s circumstances are different and it is important that these products, which do have some downside risks, are accompanied by specialist advice. ”
