AIBU to wonder why a pensioner struggling financially would not use housing equity?

Yes - do the right thing and let the equity release scheme operator profit from you, instead. 😂
And, of course, you can’t lose your home, even if you go into negative equity - unless they claim you have breached any of their terms and conditions, in which case you can be chucked out. What could possibly go wrong with the combination of an elderly person and a long term finance agreement?

Where is the 'con' in equity release? Having helped some friends to sort it out - the agreement is transparent, with multiple demonstrations of how the compound interest will work over the years. In the right circumstances it can be a sensible way for older people to use the property they are in to gain some security in the future. That could be paying off an existing mortgage, releasing a lump sum, or obtaining a monthly income boost. It could literally keep a roof over their head. Legally, the amount owed at the end of the contract (when the home owners die or want to sell the property) cannot exceed the value of the house. So no families left with an additional balance owed after the property is sold. No debt created to reduce the rest of the estate.
Equity release is going to mean that the family will inherit less when their parents die, but is that a con? I see it as one way that the people who paid for the home they live in can benefit from their investment in old age.

I’ve never complained about how little I have, for the simple reason I have plenty of money.

I have said I couldn’t live on 1k a month.

I have adult children you know. They probably won’t get a state pension. Which is why they both have private ones - like we did.

I’m not complaining. We have good pensions, no mortgage or debts. Savings. My son plans on doing the same. He’s 30.

What I said was that I couldn’t live on £1k a month.

No you don’t have any empathy. I recognise your username. You are always on these threads about pensions going on and on about how “little” you have. You always focus the conversation on yourself, never on how other generations will manage in the future (or indeed on how other generations managed in the past). It’s always about you. You’ve done the same on this thread, and I’m sure you’ll do the same on the next one.

But you were able to retire at 60. How many current 25 year olds will be able to even dream of retiring at 60? I find it a bit much that you’re complaining about how “little” you get in a pension when you have retired over half a decade before the state pension age. It’s like when my mum complains about how small her two houses are. She also retired at 60.

Presumably its 2k for 2 people though? Its onky 1k for 1.

i would think that very tight but easier in a small property with council tax discount for 1. I dont think there'd be much going out for dinner or holidays.

@suki1964 only younger pensioners who reached state pension age in 2016 or later get that amount. The basic state pension for older pensioners is about £185 per week, under £10k a year. And for many older women, who had children before Home Responsibilities NI credits began in the late 1970s, or who paid a reduced rate of NI contributions due to low pay, it’s even less. My state pension is around £5k a year. Luckily later in life I was able to contribute to an occupational pension. Of course, if I hadn’t, we’d get Pension Credit.

https://www.gov.uk/state-pension/how-much-you-get

Actually one of our clients was about to get kicked out of their home due to a clause in the equity release contract. We advised them to get legal advice and have no idea how it ended but it was a hugely stressful situation.

No they can't take your home.

I still maintain that in some circumstances, it's the least worst option. Don't do it too young, don't take a large percentage of your home's value and consider downsizing or taking in a lodger first. Also make sure you apply for pension credit first if you're entitled to it - it's very underclaimed, it's an entitlement for many that should be used if it's available.

But in the absence of all those, if you're a few hundred a month short for your needs/wants and you're in a valuable property, it's a good way to make life more comfortable and enjoyable.

And if it works out expensive, so what. A lot of people who could do equity release have hundreds of thousands of unearned equity due to lucky timing. Why not use some of it, even if it reduces the amount they leave to descendants.

We must be shit with money then. We get 3k between us - we both retired at 60 but won’t get state pensions for 4 years for DH and 5 for me and we dip into our savings and interest to pay big bills annually. So we will have 5k when we get our state pensions.

I honestly couldn’t do 1k!

Yep.
Worked in welfare benefits and had a number of clients who opted for equity release, not realising they would lose their pension credit. Devastating.
That's before you even get started on the con that most equity release schemes are.

Sorry, plus you won’t get both. AA replaces PIP when you’re older.

Anyone can cover the essentials when they're living in a paid for house of appropriate size for 1/2 people ie up to 2 bed.

Live in a larger house, or want a good amount of extra lifestyle and you probably can't, but if you want that, you pay for it yourself.

On NI contributions in relation to state pension, these used to be included when receiving CB until DC left education. Have a few well spaced children, as many of these 'poor widows' did in the 1960/1970/1980s and they could easily have 25 or more years NI contributions right there.

Add in a bit of work pre DC and you don't need much more after the youngest child leaves school to get a full state pension. My own 73 YO DM is a case in point as are lots of her friends/my friends DMs. She worked from age 16 to 19. Then didn't work until her early 40s. After which she did a bit of PT work for about 15 years until DF retired when she was in her mid 50s. She has a full state pension, no employers pension but she also has a small widow's pension as DF is deceased. I'd estimate her income is £1500 pm max and she has plenty of money. She still lives in the (owned outright) family home and is always having work done on the house or new furnishings, puts the heating on when she wants, shops at Ocado or M&S, has pets, goes on days out/weekend breaks/UK holidays, treats grandchildren. She doesn't have expensive hobbies or go abroad or run a car (but lives on a good bus routes and uses taxis at least a couple of times a month) but she has a good lifestyle given that her income is barely more than the minimum and she won't have paid income tax since she was a teenager.

None of which are means tested benefits. They’re disability benefits.

Can these equity release people take your home while you are still alive?? Thought they could only take when you are dead or sell it

Sorry to hear that ❤️

Huh?

i don’t believe this is the case.

if you get pip before you reach state pension age it continues.

You can also get attendance allowance if you are ill or disabled.

So she brought you up?

Yes but if you get the FULL state pension you’re not eligible for any benefits.

A neighbour of my father did equity release only no one in her family (son and daughter), knew about it until after she died and the house was taken by the equity company. There was no money left in it at all for them to inherit.

My feeling is that she did it to give the money to the church she belonged to as her kids never received anything at all during her lifetime and certainly didn't get anything when she died.

State pension now crosses over with the lowest income tax level.

so if you get state pension you get 12k roughly per year.

Tax free personal allowance is 12.5k

my mum got a letter this year saying they weren’t going to do it this tax year but presumably from next tax year anyone on state pension will be paying income tax.

there has been over two decades of media publicity saying not to do equity release. These days most advice is against it and you’re advised to get professional advice first.

see eg money saving expert.

https://www.moneysavingexpert.com/mortgages/equity-release/