People in the UK with pension pots have been warned they are at risk of a “diminishing retirement” as extended mortgages could cost them £52,000 in savings. Only around 39 per cent of households are on track for a moderate retirement income.
Around 39 per cent of households are on track for a moderate retirement income as defined by the Pensions and Lifetime Savings Association, new data from the HL Savings and Resilience Barometer shows this week.
And in response to the findings, Karen Noye, a mortgage expert at Quilter, told GB News: “Longer term mortgages can have significant implications for retirement plans particular for individuals in the UK who are nearing the end of their working lives.”
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Ms Noye went on, telling the GB News website: “When retirees must continue making substantial monthly payments, their ability to save and invest for retirement is diminished, potentially leaving to a less secure financial future.”
Mike Ambery, retirement savings director at Standard Life has also spoken out over the data. He said: “There’s been a steep rise in long-term borrowing over the last couple of years, with people more likely to extend their mortgage term.”
The findings show a single person’s living costs at over £31k a year and for couples this rises even higher to a staggering £43,000. If mortgage payments were swapped for pension payments during retirement, it could mean an extra £52k to fund a lifestyle after giving up work, experts reason.
Mike went on to say: “Interest rates have rocketed since the middle of last year and so it’s understandable that people are looking for longer mortgage terms to ease the monthly strain. For some it may not be possible, or even appropriate, to stick to a shorter mortgage term, however it’s worth considering the potential retirement impact of any decision.”
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