I am a baby boomer. I make no apology or claim no benefit for this. It is because I was born at a certain time – it is an accident of birth. Like many of my generation, I have concerns and worries. Health, wealth, happiness, offspring and so on. Some but not all of my generation have enjoyed the 40 year job plan and will be able to retire on so-called gold-plated final salary pensions in due course. But over the past 20 years or so, particularly in the private sector, these privileges have been withdrawn.
The one saving grace of the baby-boomer set is our property. People in the UK have become asset rich in property and pension but cash poor, as we have written here .
If you are lucky enough to have bought wisely, stayed married to the same person and kept your job, it is likely your house value will have substantially increased and any mortgage on your house will have all but disappeared. Even if you have had a more chequered time, you should still have substantial equity in your house.
If you want to raise money quickly, one way is to sell it. But hang on – this is your home. The fact that your (anticipated) pension does not meet all your needs shouldn’t have to mean that you should sell up and move which is expensive and disturbing at least. Is there any alternative? Well, yes there is. You can release some equity in your property without having to move.
So I have been thinking about this. It is possible to release the equity in your house if the youngest owner is 55 or over. Though not to case with us, I have been playing around with an equity release calculator. Now wait a mo’, I hear you say! What about all the scams and other shenanigins that went on in the `80s? Well that was then. Since 1991, this market has changed completely and it is now fully regulated by the Financial Services Authority. A useful guide may be found on the Council of Mortgage Lenders website.
But let me tell you a bit more about how this came about. I was brought up in the 50’s and 60’s when better health care and education was all the rage. I benefitted and while I didn’t enjoy the full 40 year job plan – having to bail out after 20 years and work freelance ever since – my career has not been disappointing, nor is it over yet by any means. In fact, given my fascination for things technical and scientific, the wonderful tools now available and a life-long yearning for learning, I would gladly start again.
But before our eyes, NHS facilities are cut back despite promises, our children face sky-high tuition fees, can’t find jobs and buying a house is probably beyond their means. How will we cope with our futures as we age and become infirm? How will we be able to support our children and grandchildren in the way that our parents were able to support us? How will we be able to enjoy our promised retirement when things have become so expensive?
We may feel let down, double crossed. People have put everything into their jobs only to find that the goal posts have been moved or removed completely. Legislative changes, disreputable companies raiding pension funds, stock market not doing so well, and the global crash has meant that pension values have collapsed.
Because of the better health care we received as youngsters, the lack of war and disease, our life expectancy has increased enormously. Even if we live longer, we will still need to maintain our houses and live a bit – for longer and this all costs money. While young people have much more time to prepare, we baby-boomers do not. We may need to realise our assets rather than sit on them.
This is what I’ve been thinking.