Britons should be offered taxpayer-funded 'financial MOTs' when they reach 50 to make sure they are prepared for retirement, a Think Tank said today.
The radical suggestion has been put forward in a paper on equity release by The Smith Institute, which has also called on the Government to pledge its support to the equity release market so pensioners can use the value of their homes to meet expensive care costs.
It argues that low-income workers approaching retirement are not used to paying for financial advice, so the Government should step in to offer it to them.
Advice needed: The Smith Institute thinks financial advice sessions should be provided to people when they turn 50 and when they retire so they can adequately prepare for old age.
Paul Hackett, co-author of the paper, said: 'Future generations of low income retired homeowners will increasingly struggle to meet the costs of repairs and adaptations for healthcare needs.
'To avoid unnecessary hardship, homeowners must plan ahead, including better utilisation of their housing wealth. Government should help by offering a financial MOT for everyone at the age of 50 and on retirement.'
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The research has been commissioned by Hanover, a firm which provides affordable housing for the UK's over 55s, and comes at a time of growing concern about the financial buoyancy of future pensioners.
Of particular concern is the huge burden placed on budgets in the event someone needs to go into a care home.
This prompted the Government to announce that no individual would pay more than £72,000 in care costs in their lifetime in an attempt to prevent people being forced to sell their home to pay for care.
But with accommodation costs at care homes often hitting the £10,000 mark, going into care is still a huge expense, and it has prompted the Smith Institute to call for a Government push on equity release.
The paper says a minister needs to be appointed to specifically handle equity release - loans taken out against a property that are payable, with interest, upon the homeowner's death.
A report by Just Retirement earlier this year found that most pensioners are either unaware of equity release, have doubts about its safety, or are reluctant to significantly devalue their property.
Typical annual interest rates on equity release products are just over six per cent, which on top of the initial loan will result in a sizeable chunk taken out of a property's value upon the homeowner's death.
But even though it can be expensive, the paper concludes: 'The question is not whether tomorrow's home-owning pensioners have to contribute towards their housing and care costs, but how much and in what form.'It is in this regard, and out of sheer necessity rather than choice, that equity release may in the future become a publicly-accepted mainstream product.'