Interesting insight and stats from LV=’s annual State of Retirement study, outlining the typical financial situations for retirees, before and at retirement age.

More people in the UK are working beyond retirement than ever before, but new research from LV= reveals the majority enjoy it and very few are doing it just for the money. The ‘Grey Collar Workers’ are those pensioners increasingly working into their retirement, either through necessity or a desire to stay active.

LV= has found nearly nine in 10 (87%) people working aged 65 and over are happy to be in employment, with two in five (40%) working out of choice and only one in 10 (11%) feeling obliged to work because they need the money. This is in stark contrast to three years ago when a quarter (26%) of people at retirement age were unhappy to still be working.

The study also found people are now choosing to phase their retirement, with one in seven (14%) approaching retirement age opting for semi-retirement and gradually reducing their hours, rather than retiring straight from full time work. 

We have also seen an increase of ‘Property Pensioners’ which are those who are looking to rely on the money tied up in their home to live off  in retirement. This could be through downsizing, equity release, moving to a less expensive area or renting out a room. Currently our research suggests that approximately 2.7 million retirees (22%) are ‘Property Pensioners’ however we could see a significant increase to 34% based on those who are approaching retirement.

Downsizing is the most popular way to raise money from a property [1], but this comes with significant costs, with the average house price triggering a £4,600 stamp duty bill [2].

However given that approximately 1/3 of retirees [3] expect their property wealth to help them through retirement and would be reluctant to leave their family home; under the right circumstances, releasing money tied up in a home could provide additional and crucial support in retirement. To support this, we have continued to enhance our Equity Release proposition for consumers including as well as building on our adviser support service.

Read the full report here or find out more about LV= Equity Release.

 [1] LV= State of Retirement research 2016 – 19% of all retirees have or plan to downsize, compared to 6% who would use Equity Release, 5% who would move to a less expensive area, 4% who would sell their property altogether and 1% who would bring in a lodger.

[2] According to the Office of National Statistics’ House Price Index (Jan 2016), the average cost of a house in the UK is £292,000. Based on current stamp duty rates, 2% tax would be payable on £125,000 (between £125,000 and £250,000) and a further 5% would be payable on the remaining £42,000. Therefore £2,500 + £2,100 = £4,600.

[3] LV= State of Retirement research 2016 – 34% of those approaching retirement say they’ll be Property Pensioners  who will rely on some value from their property when they retire.