An increasing number of single pensioners are using equity release to fund their retirement, in the face of higher divorce rates and insufficient pension provision, new research suggests.
The study, from the Equity Release Solicitors Alliance (ERSA), found that while the number of couples taking out equity release has declined during the past four years, the number of single people unlocking cash from their home has risen.
Four years ago, couples accounted for 72 per cent of equity release business and the remaining 28 per cent were single people, but in 2009, 61 per cent are couples and 39 per cent are single people.
And, the majority of single people taking out equity release are women, the research shows, accounting for 64 per cent of single equity release customers, compared to single male customers who currently represent 36 per cent.
Every year since 2005, more than twice as many female single homeowners have taken out equity release than single males, according to the ERSA's research.
Because women have an average life expectancy four years longer than men, the ERSA suggest that they are finding it more difficult to make their pension stretch far enough, providing greater need to find income elsewhere, such as from their property.
The increasing divorce rate among the over 60s could also be contributing to the equity release gender gap, the ERSA suggests, because it offers alternative funds when they lose their joint income.
On average, women also have smaller pension pots than men, due to taking time off work to have children and often returning to employment part-time, or not returning to work at all, leaving them largely dependent on the state pension.
Claire Barker, chairman at the ERSA, commented: "With the basic state pension for a single person currently at £95.25 per week, it seems there is potentially a case that more single homeowners are opting to take out equity release as an additional means to make their money stretch further. Those who are asset-rich but cash poor can find equity release a solution, especially those in single households who want to retain their independence and stay in their own home," she said.
"Everyone taking out equity release, whether it be couples or single individuals, should ensure they seek both financial and independent legal advice before making any decisions as it is imperative that all equity release clients understand their legal and financial obligations when taking out such a scheme."
© Fair Investment Company Ltd
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