Cost-of-living crisis – what is the impact on older homeowners?

"The cost-of-living crisis is placing a clear strain on older homeowners, despite inflation starting to ease"

Cost-of-living crisis – what is the impact on older homeowners?

The cost-of-living crisis has dominated the headlines in recent times, with much of the focus on how homeowners, particularly first-time buyers, will be impacted.

However, little foresight has been given to the impact on older homeowners. So, how have older homeowners been affected by the cost-of-living crisis so far and what challenges do they face going forward?

How is the cost-of-living crisis impacting older homeowners?

Ben Waugh (pictured), managing director of more2life, said the ongoing cost-of-living crisis is placing a clear strain on older homeowners, despite inflation starting to ease.

“Older homeowners can be vulnerable for other reasons besides financial hardship, but being on a fixed income gives them less options to adapt as prices and bills go up,” he said.

Balancing this out, Waugh said, the resilient housing market has given older homeowners a powerful asset in their equity, that younger or newer homeowners may not have. However, he added that it is important for advisers to be on hand to help decide if they wish to leverage it.

“In order to assist, advisers should illustrate both how equity release is right for them, and find the right product,” Waugh said.

Are older homeowners actually affected by the cost-of-living crisis?

We often hear older people are not affected by the cost-of-living because they have paid their mortgage off, however Waugh said this is to be ignored.

“While a good deal of older people have indeed paid off their mortgages, this is by no means true for everyone,” he said.

In reality, Waugh said some older homeowners still have mortgages and the nature of their fixed incomes places a strain on both those with mortgage obligations and without.

“In many cases, older homeowners’ situations can also be more nuanced than for working generations, as some might be less well off because they are supporting younger relatives, perhaps with their own mortgage payments, or living from savings due to a low pension income, or have handed out financial gifts in order to work around inheritance taxes in the future,” Waugh said.

In periods of economic uncertainty, Waugh said, this can make their situation rather precarious, and he added by no means should the pressure this places on individuals be overlooked.

What issues do older homeowners face regarding the cost-of-living crisis?

Waugh said while it is well known that younger people face a number of problems when it comes to finances, from saving for retirement to getting on the housing ladder, older homeowners face the same troubles.

“We often see the older generation carrying this burden too, many grandparents or parents choose to support younger relatives to get on to the property ladder, gifting money to help put down a deposit,” he said.

In addition to helping their family, Waugh said, the older generation is also concerned with building a sustainable retirement plan, and this is incredibly hard to do in an unstable economic climate and when you have already retired and moved to a fixed income.

Equity release, he said, can help with both of these challenges, making funds available on a flexible plan that allows the older generation to help family, plan for the future, or even indulge in other expenditures such as redecorating or taking a long-awaited holiday.

“However, it is important to remember equity release is not the best solution for everybody, so consumers should always consult an adviser for expert guidance,” Waugh said.

How have you seen older homeowners impacted by the cost-of-living crisis? Let us know in the comment section below.