Millions have taken a pay cut during the pandemic, including Jackie Ward, 54, who has had all her income wiped out since she shut her business to comply with the rules.
Ms Ward, from Newcastle, has been in the midst of her own financial crisis after her small barber shop was forced to close its doors for most of 2020 under lockdown restrictions.
Blocked from receiving furlough, she has relied on £388 a month in Universal Credit. But this falls far short of the £1,300 she said she needed to make ends meet.
Ms Ward said she had had no choice but to dip into her savings and now she fears they will soon be exhausted. She has £6,000 left.
“My business is struggling badly post-lockdown and may have to close for good if this goes on much longer. I can’t see through the mud,” she said.
Ms Ward has £80,000 in her private pension but cannot get access to the money until her 55th birthday in December. She had hoped to retire partially this year, as she suffers from chronic back pain. However, she is increasingly concerned that she will not be able to afford it.
She owns a £500,000 home and said she would consider freeing up some money via an equity release plan. She said: “I don’t want to move but I have no cash coming in until the shop starts running again. I’m sitting on a pile of money that I can’t touch.”
Ideally, Ms Ward would draw out £50,000 to last a decade, which would allow her to fulfil her dream of travelling around Britain and France in her camper van with her dogs.
Her elderly parents have multiple properties that she stands to inherit alongside her sister when the time comes.
Andy Wilson, equity release specialist at Andy Wilson Financial Services, an advice firm:
I would firstly advise that as Ms Ward is currently under the age of 55, the minimum for an equity release plan, she could not take up such finance on her home at the moment. She could however do so at the end of this year.
The income shortfall would appear to be potentially temporary, given that her earnings could at least partially return once lockdowns end. The maximum funding required would be around £1,300 times 12 months, so £15,600, but less if she returned to work.
Advisers are required to consider alternative methods of funding before they look at an equity release plan. In this case, with no assets she would wish to sell and no desire to downsize, I would ask whether the parents might have savings they could temporarily lend to Ms Ward to fund her income shortfall for a year, after which she could repay them from a new equity release plan of her own.