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pension or equity release??
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piltonvet
Posts: 113 Forumite
been reading a bit about equity release schemes and they seem to be getting more popular by the day.
im 42 and have an option to join a company pesion scheme which would cost about 40 quid a month,which the company would match .
this would stetch my budget a bit.
i was thinking about not joining and opting for an equity release scheme when i retire.
taking the option of a monthly payment .
is this a good idea or should i join the company pension?
current house value about £130,000.
any idea what i could expect to get a month if say i sold 75% of the property to a scheme at todays rates to give me an idea of the monthly income.
hope that made sense
im 42 and have an option to join a company pesion scheme which would cost about 40 quid a month,which the company would match .
this would stetch my budget a bit.
i was thinking about not joining and opting for an equity release scheme when i retire.
taking the option of a monthly payment .
is this a good idea or should i join the company pension?
current house value about £130,000.
any idea what i could expect to get a month if say i sold 75% of the property to a scheme at todays rates to give me an idea of the monthly income.
hope that made sense
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Comments
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Hi piltonvet
im 42 and have an option to join a company pension scheme which would cost about 40 quid a month,which the company would match
I'd go for both if I were you - pick up the free money from the pensions scheme first and then do the equity release thing later as a topup.
Win/win as they say Trying to keep it simple...
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equity release schemes are becoming more frequent. I wouldnt call them popular. You are effectively going down a last resort action when you do equity release. It can be for genuine reasons but often its for lack of planning.
Ideally, you shouldnt plan to do equity release in retirement. 1 - That option may not exist when you retire. Or the age may get increased 2 - House prices may drop in real terms value which would hit the amount you can release. 3 - What happens if you become ill and cannot work and cannot keep the house. And a bunch of other what ifs apply.
At age 42 you still have time to do something about your retirement planning and as a homeowner £40pm is nothing on the budget. Just you wait for another interest rate rise to hit the mortgage or the inevitable council tax rebanding/repricing next year.
I don't want to sound harsh in this post but it seems you are planning to fail. Why not review your spending and review your income requirements in retirement. You may find that equity release isnt the solution. After all you can only release a percentage of the capital and when thats gone, what are you going to do?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Completely agree with the above posts. Join the pension scheme and get the free money from your employer. Look through the rest of the MSE site and sort your budget out so that you can afford the £40.
Get the pension sorted first. You can then do the equity release as well if you need the money after you retire.0 -
Hi
We did equity release when we both reached 68, but we did NOT do it as a top-up to our pensions. I would not have dreamed of 'planning' equity release some 20 - 30 years in advance!
You have a chance to pay into an employer's pension scheme and the employer matches your contributions. This is money that you can't afford to throw away! You won't get an offer like that anywhere else. 'The contributions are stretching you'...maybe, but one day you'll be glad that they did. Your contributions are money well spent. What would you spend that money on otherwise? All too easy to fritter it away on 'stuff' and have nothing to show for it.
Aunty Margaret[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0 -
I see that you are a new forum member and may not have looked at the other forums and Martin's money saving tips - follow those and you can eaily save £40/month that you can put into your pension!0
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being 42 i thought it would be too late ta bother ,but will take the advice tighten me belt and start saving for old age :idea:
thanx for replys0 -
No, of course it's not too late to bother. You have another 20+ years, and by then, who knows, everyone may be working until they're 70 anyway.
FWIW I'm going to be 70 soon and I'm STILL saving because I reckon we might need a little extra when we get to be 75. Having used equity release to pay off the original mortgage, I'm able to save £200 a month. I wish I'd saved more when younger, but there were reasons why not. Never too late!
Aunty Margaret[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0
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