RETIREMENT should be the longest holiday of your life – but for many it is more like an endless punishment as they face poverty and struggle to make ends meet.

For while some people are able to walk out of work for the last time and receive a golden handshake that will ensure they have plenty of grey pounds to fund a long and happy retirement, this is not always the case.

The simple fact is that for many workers there is a massive gulf between what they need for a comfortable retirement and what they are saving up in their pension funds.

As a result, one in three working adults now fear they won't have enough money to live on in retirement, according to a survey by Which? Money.

Recent research showed that most people thought they would need about £300 a week after tax to live on when they retire.

But when you consider that the basic state pension is worth just £84 a week, there is quite a considerable shortfall.

Financial experts claim that to plug that financial gap, you would need to start putting away more than £150 a month from the age of 25. However most people don't even start contributing regularly to a pension until they're in their mid-30s.

Coupled with this is the fact that the Government is increasing the age at which both men and women will be able to collect their state pension.
The eligible age limit for both sexes will rise to 66 in 2024, to 67 in 2034 and 68 in 2044, with each rise being phased in over two years from the 2020s onwards.

The reason for this is this country is becoming one with an ageing population, which means that in future, there will be fewer workers to pay the pensions of a greater number of older people.

As a result, the Government Pensions Commission, headed by Lord Turner, was drafted in to find a way that the country could defuse what has been called the "demographic time-bomb."

The resulting White Paper, which proposed raising the eligibility age for state pension, sets out the future of the state pension far into the 21st century.
In it there is a bit of a trade-off going on. People will collect their state pension later, but it will be more generous.
Put simply, restoring the earnings link means the state pension will go up in line with salaries, rather than prices, meaning bigger annual rises in the state pension than at present.

However most experts agree that if you want a comfortable retirement, you are still going to have to raise your own money for it.

Disillusioned with a lot of the controversy surrounding both many private and company pension schemes, a growing wave of workers have lost confidence in pensions as being the prime source of finance.

Payouts on personal pensions have halved in the past decade, according to a survey carried out by Investment, Life and Pensions Moneyfacts.

According to the research someone retiring today could be 50 per cent worse off than a pensioner who made the same contributions but retired 10 years ago.

As a result many people are now looking at other ways to maximise their cash.

Some are turning to bricks and mortar, purchasing second and third properties which they plan to either sell at a later date, or rent out to provide revenue.

While others are using the bricks around them to raise vital funds during their retirement.

Interest in equity release has soared in the last year according to new figures from Age Concern.

With more than £1,000billion tied-up in the homes of the over-65s and the equity release market 25 times the size it was 10 years ago, it's hardly surprising.

Releasing equity can certainly make a big difference to an older person's standard of living and can make an appealing choice for "asset rich" but "cash poor" older people.

Chris Kelly is managing director of South Tyneside-based independent financial advice company Hanson Wealth, which has a national team of advisors and a headquarters at The Quadrus centre at Boldon.

He said: "People feel safer releasing equity in their homes these days. One of the main changes is that homeowners do not have to draw down all the money in one go. They can agree an overall sum but just use what they need when they need it.

"There are also safeguards against negative equity. The establishment of the trade body Safe Home Income Plans (SHIP) prevents customers owing more than the value of their property. Anyone considering equity release should make sure the company they are dealing with is a member of SHIP."

Chris explained that the equity release market is now 25 times the size it was 10 years ago and is set to continue rising after changes in how homeowners access their assets.

But he added: "Equity release is not always the best option for everyone though and the decision to release capital in this way should never be undertaken lightly. Homeowners should always seek independent financial advice as equity release is a major commitment.

"Anyone considering equity release should also first check they are receiving all the benefits they are entitled to and explore their other options.

"But one thing for sure is that as the population ages, releasing cash in this way will become the norm. Industry figures show that the equity release market is set to grow by about 25 per cent a year from 1.1billion in 2005 to 2.9billion in 2010.

"It is not surprising that equity release is becoming more popular as many older people are finding their income in retirement inadequate and that their wealth is trapped in their property.

Gordon Lishman, Director General of Age Concern England, added: "It is unsurprising that equity release is becoming increasingly popular, as many older people are finding their income in retirement inadequate and that their wealth is trapped in their property.

"However equity release is a major commitment and older people should be aware of the pitfalls and make sure they get the right advice."

Pensions - the changes and how they will affect you

* The state pension age for men and women will rise to 66 in 2024, to 67 in 2034 and 68 in 2044 – each rise will be phased in over two years from the 2020s onwards.

* During the next parliament, the state pension will become more generous and future increases will be linked to earnings rather than prices.

* The number of years it takes for people to qualify for a full basic state pension will be cut to just 30 (at present, women have to work 39 years to earn a basic state pension and men 44).

* From 2012, people will automatically be enrolled into a new, low-cost national savings scheme, although they have the chance to opt out if it is not suitable for them.

* So is this the end of a dream of retiring early? The idea is that you wait longer for your state pension, not that you absolutely have to continue work. You will still be free to retire early as long as your employer agrees, but you will have to support yourself until whenever the state pension kicks in.

* Will you be forced to save for your retirement? The Government has gone for a system of soft compulsion. If you are an employee, you will be automatically enrolled into the low-cost national savings scheme from 2012.
Employers can opt their employees out of the saving scheme, so long as they offer their own scheme on an auto-enrolment basis and are making contributions at a higher level than would be the case under the savings scheme. Membership of the savings scheme will not bar people from a full basic state pension.

* Is this the end of the pensions crisis? It is far too early to call time on the pensions crisis. The White Paper certainly represents the biggest overhaul of the state pension system in 50 years, but some experts suggest that more needs to be done.
The decision has yet to be made who gets to run the new national savings scheme – the Government or the insurance industry and some critics warn that the White Paper does not do enough to boost workplace pensions.