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

There’s plenty of people have got real housing problems that cannot be resolved but this woman, no, she’s making a choice. She is choosing to keep her house over having a better quality of life.

Because when you are short of money or are on a fixed income, knowing that the roof over your head is paid for is a massive thing. She may be hungry, get cold etc, but she won't be living on the streets. As soon as you sign over your home to someone else, you lose that security.

Aren’t about 1 in 5 boomers living in poverty, and I’m sure not all the rest are sitting on millions.

We don’t know how big this woman’s house is and where she lives. Could be a small 2 bed terrace in a cheap area. What can she do to release funds in that example. A person renting with similar income and sized property could probably get benefits if they don’t have other assets.

The only issue with being a renter is it can be insecure, you don’t want a keep moving on, I’d downsize definitely, hire some help but never choose to rent. It’s a nightmare in today’s market.

I have no one to leave my house to (no kids and nephews and nieces don't need the money), so I'm planning on selling up when I'm about 70 and either renting or buying a small flat and living off the equity. It will be much easier for whoever is dealing with probate to just have to sort out cash in the bank rather than have to dispose of a house that isn't in the UK.

Some equity release can be sensible but there are so many scams around it, it's hard for people to understand.

I'm unmarred, no kids, so part of my later life funding plan would be c33% equity release of my home if I needed it. Would leave enough to cover costs etc when I die and probably some inheritance for family (if I need care however, obviously the house would be sold to fund that).

But how quickly do you recover that £30k with lower council tax, energy bills and maintenance costs?

Plus you might have cash in the bank even after the £30k.

Also even if you don’t, so what? If you move to a property that is more pleasant to live in what’s the problem with spending a bit to achieve that?

They are loan sharks. I’d rather eat one meal a day then give a lifetime investment to a loan shark company with extortionate interest rates.
She should rent out a room or move to a smaller home.

This makes a lot of sense, but there's also the issue of everything costing vastly more than it once did and some elderly simply not getting "used to it"

In addition there's always been a thing of savings being strictly "for a rainy day" and if you add hopes of leaving something for the kids it can be easy for this kind of mindset to develop

This ☝🏼

For many in that generation and some generations that came after, housing security is everything.

Health is wealth and so is certainty of the roof over your head. Not all wealth is measured financially.

There are many working in low paid jobs now who will never own and have rent to pay out of just a state pension in future generations

You are “wealthy” in terms of your working life/salary and what you have at the end of it.

I know an elderly couple who have sold a large bungalow released half a million and are now renting rooms in an assisted living place. They have freedom but support if one of them falls.

Maybe renting isn't great but they certainly feel calmer and less stressed about money.

I agree with you. I know lots of older people who live in $1M+ houses yet are always moaning about not having enough money for essentials. Well just bloody move then! I have no sympathy for these people.

Selling costs a lot.

i have a house which is too big for me and by the time I’ve paid stamp duty and moving costs you are looking at 30k.

It's an interesting question.

Many people do not understand lifetime mortgages or equity release as can be seen from the answers above.

I think there are several answers :

i) People want to leave a higher value as inheritance, which would be reduced by lifetime mortgage or equity release.

ii) People see their house as a red line - and once they start using it to fund day to day living there they are entering a new stage of financial desparation.

iii) People don't understand products like equity release and lifetime mortgages which often have a bad reputation. Many people will call them bad without understanding what the product is or why.

iv) Some people have a completely irrational attachment to their properties and the slightest hint that they might be losing control of it sends them into complete breakdown.

Personally I don't have an issue with people wanting to hang onto the house and not liquidate it and live in poverty. It's their choice.

What I do have a problem with is those same people claiming they are poor and deserving of state benefits and the government giving them support. You shouldn't be more eligible for support just because you've decided to pile all your money in one particular asset.

Statistically yes - but that's on average.

Pensioners who really are struggling and NOT wealthy are hardly a tiny minority. There are loads of them.

And Gvt DOES make policy that includes indviduals with different circumstances - hence Pension Credit.

I am a younger Boomer - I benefitted a LOT (relatively) in not having a student loan, affordable house prices.

But I was always in a low paid charity sector, my employers never paid a penny into my pension until the last moment when workplace pensions were mandatory, and then at the lowest rate. I didn't get any free childcare hours etc - and for the majority of my working life it was expected that the State Pension would be paid earlier than it was, and at a rate which then seemed liveable on. I didn't have enough ££ for most of my working time to contribute to a pension. Never had tine off work except 2 4 month maternity leaves - couldn't afford more.

All fine - things change, I am not moaning and I do know how hard it is for younger families now.

But I am managing as a single woman on a tiny amount above state pension and am definitely NOT wealthy - whatever the stats say. And I am far from unusual amongst my friends.

I inherited a bungalow in a safe, vibrant area, it’s been a bit costly, but we have kept it (renting out long term to a lovely pensioner), for this exact reason. There is no way we are selling that property.

Yes we could get a huge lump sum now, but we are thinking ahead, not enough do (and I realise not everyone inherits a perfect retirement property) but we could be “living it up” but would rather the more boring, secure option.

Rent is expensive
here a 400k house sold you could rent back for 24k a year so 16years.
I guess you could invest for 16k a year.

A huge number of houses are not eligible for an ER loan, plus they have such bad press, most people are put off. She may also have passed the age where is feels feasible to move, it's a massive undertaking and hard once you are in your 70s+.

I don't disagree though that it's a bit off claiming poverty whilst living in a decent sized home.

I think the underlying issue here is insufficient supply of decent places for older people to move to. We would move / downsize if we could find the right place but what we are looking for barely exists, flats are shoebox sized with massive service charges and bungalows are priced higher than most houses so don't release much / any equity anyway.

Elderly should be able to eat and pay heating, water and rates using the pension.
They deserve to be able to keep their home. They saved for it and paid taxes.

House equity release - from AI:

Releasing house equity in retirement provides tax-free cash to supplement income, fund home improvements, or clear debts without forcing you to move. However, the interest on lifetime mortgages compounds rapidly, significantly reducing the future value of your estate and potentially impacting your entitlement to means-tested state benefits.

And ultimately, it is recognised as being a bit of a con.

Renting - even with the recent changes that can be unstable. And you would likely struggle to put in home adjustments (like stair lifts, grab rails etc). Daft to go from owned to rented if can be avoided.

And buying a smaller property? Between stamp duty and all the other moving costs you may not be left with as much as you would like (depending on the difference between the sell and buy price).

There are a lot of other downsides to equity release and if you are elderly and unsure and you've heard all the downsides then you'd probably give it a swerve. I mean she could use food banks but she doesn't mention those either.

An elderly lady wpuld want to rent?
Unstable and not so great maintenance let alone the rebt costs I am sure are as high in the Uk.
Get real.

@Tabarnak
Boomers as a generation are wealthy - the wealthiest probably ever
The Government can’t make policies for individuals.

Winners and losers at every age.