A third of over 65s survive on an income of less than the minimum wage but are unwilling to unlock equity in their homes to ease their financial plight.
Around two thirds of over 65s with low incomes have money tied up in their homes.
Although 85% own their homes, 42% would rather go without luxuries and scrimp to pay bills than borrow against the value of their properties.
The research, by equity release provider LV= estimates 150,000 over 65s have trouble paying utility bills because of their low incomes.
LV says typical financial sacrifices include:
- No foreign holidays (25%)
- Not buying a new car (16%)
- Eating at home rather than dining out (15%)
- Not being able to afford to replace household goods (15%)
- Not having the cash to buy presents for family or friends (5%)
Living on less than minimum wage
The research also showed that more pensioners (54%) with an income of less than the minimum wage are more likely to have to make financial sacrifices.
LV= estimated the minimum wage equivalent income of the poorest pensioners at £12,196 a year after tax.
However, 85% of pensioners own their home and have an average £235,570 of property equity that they could borrow against.
The latest figures show only 7% of pensioners opt for equity release and that many incorrectly believe that their debt would end up more than the value of their home and would pass to family and loved ones if they took on a lifetime mortgage.
John Perks, managing director of retirement solutions at LV=, said: “It’s a shame that a lot of pensioners are struggling with their bills when so many could improve their finances by tapping into the capital locked in their homes.
Aging population
“Equity release can offer financial options that would make their lives much easier and without leaving any debt for families or loved ones.”
Speaking recently, Christopher Woolard, Director of Strategy and Competition at the Financial Conduct Authority (FCA) explained funding retirement for an aging population was one of the most pressing issues for financial firms.
In a mortgage market review, the FCA wants to give equity release a better reputation and encourage lenders to offer better structured products.
“An aging population will have a huge impact on mortgage markets and the debate should be had about what products they should be offered and whether innovation and greater choice will benefit consumers,” he said.