Ever since Rishi Sunak called a general election on 22 May, the frequency with which MPs have made appearances in print, on television or online has, as you may expect, been notable. Yet it seems that far too frequently, these appearances act as a platform for parliamentary candidates to tow their respective party line and deliver expensive promises or make uncosted spending commitments.
One friend gave up on the election before the end of May; he’s since spent his time calculating the saving on his electricity bill by keeping his TV and radio switched off. “The silence is golden,” he told me the other day. “I’m reading more while spending more time planning my retirement,” he added, likening the pre-election phase to “lockdown without the restrictions and a known finishing date.”
Doubtless thousands of folks across the land are taking the opportunity to switch off from politics for a few weeks, avoid the platitudes and do something useful instead.
Retirement planning certainly falls into this latter category, although whether it’s possible to conclude such an important project within a relatively short space of time is questionable.
But where to start?
Conventional wisdom suggests that to begin the planning process, we should list our retirement goals, an exercise much easier said than done. My own, constantly tweaked, list is split into ‘big ticket’ items, both family-related (regular grandparent duty being a good example) and income-related, namely objectives designed to ensure that, my family is, financially-speaking, protected and secure. This will hopefully be achieved by eventually drawing money from investments, pensions and savings as tax-efficiently as possible.
Then we have a succession of smaller, though no less enjoyable commitments, such as improving my rather wooden piano technique and playing more golf. I fell out of love with golf for a number of years, but played a few rounds recently and really enjoyed the competition, banter and weather to the point where I now wish to renew my acquaintance to the sport, probably before retiring.
Many people of pre-retirement age will consider similar (or completely different!) possibilities prior to clocking off from work for the final time. A sizeable number may simply prefer to work less, perhaps a couple of days a week before easing themselves into fully fledged retirement.
One ‘big ticket’ target for a large number of soon-to-be retirees is more frequent travel, whether that be exploring destinations across Europe, or embarking on once-in-a-lifetime journeys around the globe. Irrespective of whether you’re looking forward to gleefully ticking off bucket list destinations or discovering places considered off the beaten track (Bahrain, Bologna, or upstate New York are personal ‘hidden gems’), listing countries and regions you fancy visiting is part of the fun.
Or how about having a holiday home of your own?
Who hasn’t been on holiday and, during an idle moment, reflected on how wonderful it would be to own a place in a country where year-round sunshine and warmth were virtually guaranteed, where the locals are friendly and property values surprisingly affordable?
Hundreds of thousands of Brits have built on similar reflections, tentatively at first, viewing a series of holiday homes before taking the time to examine the legal process associated with buying and familiarising themselves with any onerous tax obligations to which they may unwittingly commit.
Travel, or acquiring an overseas (or UK-based) holiday home are both ‘big ticket’ retirement ambitions, though there are many more. Paying off a mortgage is a cause of celebration at any time, while retirement offers an ideal opportunity to spend more time with the family, particularly if your offspring or siblings are scattered across the world. For an increasingly large number, leaving a legacy for future generations is their number one ‘big ticket’ priority. Gifting an early inheritance to loved ones can provide much-needed financial support and security for their future endeavours.
Improving the home is another popular retirement project. This could involve renovating the kitchen to accommodate family get-togethers or adding a spacious, airy extension where you can lounge and enjoy peace and quiet.
But hang on: doesn’t this sound rather too similar to the succession of unfunded pipedreams of the sort currently espoused by would-be MPs of every hue? The lists briefly outlined above almost demand readers to declare ‘Show me the money’.
While it’s true to say that our retirement goals may (should?) be ambitious, it would be folly to ignore the cost of satisfying them. This is where having the ability to access a percentage of your property wealth, using it to fund retirement aims, could ensure that you can satisfy both big, and smaller-ticket ambitions much sooner than you think.
As every homeowner knows, property values have risen sharply over the past four decades and equity release enables them to benefit by accessing a percentage of their property wealth built steadily over the last 35-40 years.
The amount of tax-free cash that could be released in this manner is calculated using the age of the youngest homeowner and the property’s value. Ordinarily, the older you are, the greater the sum that can be released.
Of course, there is the small print, the legal stuff which must be considered – and fully understood – before you hop over to Spain to acquire a two-bedroomed apartment on the seafront in Malaga.
Equity release is an arrangement whereby homeowners borrow against the value of their home. Unlike conventional mortgages, however, the most popular form of equity release – a lifetime mortgage has no contractual commitment to make any repayments. They do however provide a modicum of flexibility with the flexible feature called voluntary payments. These allow mortgagors the ability to repay usually upto 10% of the original amount borrowed annually, even by standing order if preferred.
This format is becoming more popular, especially with the higher interest rates we’ve seen recently, with many over 55’s managing the future balance and hedging their bets that rates will fall again in the future, at which time remortgaging may be an option. Planning ahead with an equity release specialist can certainly pay dividends in this regard.
Each individual’s retirement goals are likely to be absolutely unique and the property wealth homeowners have built over many years could be the key to enjoying a retirement laden with a unique collection of aims and ambitions.
Nevertheless, it’s worth noting that equity release will reduce the value of your estate and could affect your entitlement to state benefits. However, given that homeowners who are eligible to apply for equity release must be at least 55 years of age, there’s a strong probability that they completely understand the old Northern phrase: ‘you don’t get owt for nowt’. It’s a pity some of our wannabe MPs fail to comprehend it.
