A third of over 55s relying on state pension to fund costs of old age

Almost one in two (46%) of over 55s think old age will mean costly home adaptations - but 37% would be forced to use their state pension to install options such as stair lifts, handrails and ramps, reveals research among over 55s by Newcastle Building Society.

Almost half (47%) said they would dip into their savings, 30% would use a private pension, and only 9% would consider releasing money from their home. One in five (19%) simply don't know where they will find the money. Of the 10% who selected ‘Other', most said they would apply for a grant from their local council.

With the total cost to carry out these alterations almost £4,000, and with the UK state pension standing at just over £4,500 a year, Newcastle Building Society believes many retirees would find it impossible to finance alterations to the home as well as pay for basic living costs, not to mention ongoing maintenance of their home. And, while most people have equity in their property, they are unlikely to have enough in their pension pot to finance these changes.

Bob Mottershead, Retail Sales Executive at Newcastle Building Society says: "It is worrying to see that so many people aged 55+ are looking to their pensions to pay for essential adaptations to their home, when they could be overlooking their biggest asset - money tied up in their home. While there is also government assistance available, qualifying for a grant is not guaranteed and should not be wholly relied upon."

Newcastle's survey also asked people of other generations whether they would consider using equity release to fund the improvements and on average only 9% had considered this option.

Mottershead continues: "It is interesting to gain an insight into what could I think be a lack of awareness on equity release, amongst both the older and younger generations. The findings highlight the need to educate all ages on the benefits of taking out such a scheme. The research could also show a reluctance to explore equity release, as many people don't realise they could still own their home - which is one of the most attractive reasons many of our customers choose lifetime mortgages over other options.

"By using an equity release product such as a flexible drawdown facility (where clients only pay interest on the amount they use), homeowners would be able to free up cash from their home and generate a substantial amount to pay for the costs associated with getting older.

"Educating the under 25s on equity release will also expand knowledge of the sector and equally benefit those with parents close to retirement age, as the decision to opt for equity release is one which should be discussed and considered by all family members."

Rob Pinsent, the Head of Anchor Staying Put, the network of home improvement agencies operated by Anchor Trust, England's largest provider of housing, care and support for older people, said: "Many older people are choosing to continue living in their own homes. There are strong reasons for this: their homes may be where they spent their married lives, raised their families, and built friendships and social lives.

"As older people increasingly opt to remain at home, there will be greater demand for the adaptations and services which will enable them to live safely and securely, but also to enjoy an independent lifestyle.

"Anchor Trust pioneered the concept of home improvement agencies, and now works in partnership with local authorities to deliver services to over 40,000 older people a year; adapting their properties and helping with gardening so that they can continue to enjoy their homes both inside and out.

"We are also piloting a similar business in three areas - Yorkshire, Berkshire and London - which provides self-paying customers with a range of home improvement services, but also care and 'lifestyle adviser' services which enable them to live rich and rewarding social lives.

"Anchor is continuing to develop expertise in ensuring older people have the appropriate information and advice with regards to equity release and loans which can be used to fund home improvements."