In its survey, the financial services provider explored whether people were retiring without having fully paid off their mortgage.
In order to pay off their mortgage debt, more than half (56%) said they paid the mortgage debt with their pension/lump sum. This may be a sensible step to take, but will have reduced their retirement income, LV= said. “Due to house price inflation, mortgage terms are now much longer than they have been historically, and as a result many people may find themselves at the age of retirement without having fully paid off their mortgage.
Consistent with this, the research found that a third (33%) of current mortgage holders do not believe their mortgage will be paid off until age 65.
LV=’s report relied on public data, where available, and independent research conducted quarterly among 4,000 UK adults by Opinium Research.
The survey also showed that one in ten people with a higher cost of living struggled to pay for their food. LV= asked those with a higher cost of living how they cope with these additional demands on their finances.
Some said they were saving less, buying cheaper brands, having fewer days off, or canceling some subscriptions. According to the report, almost a quarter (23%) of those with additional living expenses have dipped into their savings to pay for the increases they are experiencing.
LV= found that some consumers have had to take on more debt (8%) or are borrowing from friends or family to make ends meet (5%). 5% said they had terminated some insurance policies. 13% (equivalent to 6 million UK adults) said they struggled to pay for heating and 10% (4 million UK adults) struggled to pay for food. A number of respondents indicated that they turned their heating off completely or tried to use a minimum of electricity, gas and hot water.
Clive Bolton, Managing Director, LV=Protection, Savings and Retirement, said the result of the company’s latest survey LV = Wealth and Wellbeing Monitor highlighted how the finances of millions of people are feeling the strain of the cost of living crisis.
“Our savings, financial outlook and spending indices are all now the worst we’ve seen since the start of the crisis. Wealth and Wellness Monitor two years ago. Many consumers have seen their cost of living rise dramatically and are having to take action such as cutting back on non-essential spending, dipping into their savings or going into debt. »
He added that the rising cost of living was a particular problem for those on retirement income.
“They may need to withdraw more of their retirement savings each year than originally planned, running the risk of prematurely depleting their pension fund. Consulting a financial adviser about their retirement plans is a good way to consumers to understand their retirement options and how they can ensure that their retirement income keeps pace with inflation.
A positive note from this quarter’s research is the finding that the past few years have made people more aware of the things that are important to them in life, Bolton continued. “When asked how their focus had changed, many of our respondents told us that their health, family and work-life balance had become more important. Some also reported having a better work-life balance now, compared to before the pandemic. With the Bank of England predicting a continued rise in inflation this year, we’ll see how consumer behavior changes in next quarter’s results.”