Retired, pension too small, top up from equity in house?

PinkLint_4

Hi there, my parents have both retired over the last year but have discovered that their income from their pensions isn't enough for them to get by on. They own their house outright and I was wondering if they could somehow draw an income from the equity in their property? Or what might be the best option for them in this situation. They are reluctant to sell and move unfortunately.

Any advice here would be very much appreciated.

Thanks.

PeacefulWaters

Downsize.

How old are they?

How much is the house worth?

How big is the mortgage?

both retired over the last year but have discovered that their income from their pensions isn't enough for them to get by on

Did they do any sort of budget beforehand?

kidmugsy

Are they both drawing their State Retirement Pensions? What other pensions do they have? Have they thought of taking in a lodger? You can charge up to £4250 p.a. and get it tax-free. Google: Rent a Room Allowance.

sleepless_saver

Have they checked if they are entitled to any benefits? http://www.moneysavingexpert.com/family/benefits-check

sleepless_saver

How big is the shortfall between what they need and their income?

If they've just retired and are in their mid sixties they likely have another 20-30 years to fund. Unless they have a lot of equity to release via an equity release scheme then downsizing may be the only long term solution, and it would be better to do it sooner rather than later.

Mojisola

If they've only just retired they are still young, have they thought about one or both of them getting a part-time job to bring in some extra money?

atush

Part time job and rent a room.

I'd do both before I would do equity release.

And why oh why would anyone retire before they made a basic financial plan? WHy didn't they keep working if they could not afford to retire? Madness.

xylophone

http://www.equityreleasecouncil.com/home/

There is some information above but why would they wish to stay in a house whose running costs they can't afford?

They're old enough to realise that you cut your coat according to your cloth?

OldBeanz

atush wrote: »

...

And why oh why would anyone retire before they made a basic financial plan? WHy didn't they keep working if they could not afford to retire? Madness.

Are you new to this board? :A :)

jamesd

Equity release is possible but downsizing and/or moving to a cheaper area is a much better deal if they can do it because it also cuts their bills.

What other assets do they have that could potentially be used to increase income? I'm thinking of savings, personal pensions and anything else of significant value so we can see whether it's being used efficiently.

What are their ages? Has either of them reached state pension age yet, or if not, when will they? I'm asking about this because deferring the state pension is a good deal and would probably be an excellent use of either savings or equity release money, particularly if either of them reaches state pension age before the flat rate pension starts.

Energy efficiency measures like more efficient bulbs, appliances and insulation and perhaps even solar panels could be a useful alternative use for some money that could reduce their living costs.