New data reveals nearly 12-year gap between life expectancy and healthy years, fuelling equity release interest
The widening disparity between healthy life expectancy and overall life expectancy in the UK is placing more pressure on older individuals to fund extended periods of declining health, according to equity release adviser Key Later Life Finance.
Figures from the International Longevity Centre (ILC) reveal that the gap between the years people live in good health and total life expectancy has now reached 11.7 years. Average life expectancy has risen from 81.7 to 82.2 years, while healthy life expectancy has only marginally improved, from 70.1 to 70.5 years.
At the same time, average working lives have shortened. ILC data shows that employment spans have fallen from 31.6 years to 31.1 years, making it harder for many to build adequate retirement savings.
Key Later Life Finance argues that housing wealth could help fill this gap. The company estimates that more than 10 million over-65s in the UK own their homes outright, with a combined property equity value of nearly £2.944 trillion. This wealth could be accessed to support retirement income and offset unexpected costs, particularly those related to long-term health conditions, the firm said.
Government statistics indicate the average annual income for retired individuals is £20,120, rising to £29,170 for couples. However, costs for home care – averaging £25 per hour – can quickly strain budgets. Residential care costs can be even higher, reaching up to £1,400 per week.
“People in later life can have complex and expensive financial needs and the impact of ill-health can make a major difference,” said Will Hale (pictured), chief executive of Key Advice. “It is very welcome that people are living longer but healthy life expectancy needs to be considered as part of financial planning.
“Later life lending options are available, but more people need to be aware of them, and it is the responsibility of all advisers to take property wealth into consideration. Lifetime mortgages enable money to be drawn down tax free which can be a sensible way for over-65s to fund retirement needs.
“However, everyone’s circumstances are different, and it is important that these products, which do have some downside risks, are accompanied by specialist advice.”
Research by the company shows that more than half of financial advisers foresee an increase in demand for later life lending in the coming year. Of those surveyed, 54% expect higher enquiry levels, citing new product developments and a more stable housing market as key drivers. Among them, 35% pointed to the expansion of lending solutions tailored for older borrowers, while 34% cited improved property sector confidence.
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