Brendan Gilligan

Head of Proposition

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Rethinking the options for your self-employed clients

2026-10-07 00:00:00

2026-08-05 00:10:00

Brendan Gilligan

Head of Proposition

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Long-term financial planning could play an important role in helping your clients maintain a good standard of living during their retirement. However, preparing for the long-term isn't always straightforward: how can someone predict the next 30 years of their life if they don't know what is going to happen in the next five?

Even for clients in a relatively stable financial position, it isn't always possible to predict life and finances. This could be an even greater struggle for the estimated four million¹ self-employed workers in the UK who:

• Could experience periods of irregular or less predictable income^{2 and 3}.
• May find traditional borrowing more complex if lenders require income verification⁴.
• Are less likely to save into a pension than employed workers².

When the traditional options don't suit your client's reality, providing relevant advice may become more complex. For self-employed homeowners, the wealth held in their property could form part of that wider conversation, with a Lifetime Mortgage potentially offering one way to access it in later life.

Why does retirement planning look different for self-employed people?

Self-employed people may not have a guaranteed income. They could own a business popular during tourist season or may do seasonal work like gardening. External factors like the cost-of-living could add to that potential pressure as customers may not have the same level of expendable income. If a self-employed worker is unsure what their income will be in the next few months, then they may be less inclined to save "extra" money in a pension where it becomes more complex to access it.

Additionally, self-employed people don't benefit from automatic enrolment in a workplace pension². The potential disadvantage is not that self-employed people are unable to save a pension, but that it is not automatic. According to the "default effect", people are more likely to stick with something if it is automatically given to them or pre-selected. Employed workers may not need to move money directly from their bank account into pension savings whereas self-employed people need to actively consider and plan for them.

This makes it important to consider the bigger picture of your client's finances. For homeowners, that may include understanding whether their property could complement their pension savings and other assets in later life.

Can external factors have a lasting impact?

Unforeseen external factors could impact the finances of self-employed workers and their borrowing options later in life. For advisers, this can make it more difficult to accurately carry out affordability assessments, or predict which savings, assets or borrowing options may be most relevant to a client in the long-term.

Since 2019, we've experienced a pandemic, the cost-of-living crisis and fluctuating markets due to global conflicts. These aren't events anyone could realistically fully plan for and combined could affect an individual's day-to-day costs and their ability to save. However, changes in circumstances aren't always large-scale events; your client could lose their job, decide to start a family or simply encounter an unexpected change in their life.

For self-employed people, typical life experiences could affect their finances differently from employed workers. For example, in a report carried out by IFF research on behalf of the Department for Work and Pensions³, around 4 in 5 self-employed workers who had taken leave due to sickness in the last year reported that they received no income during this period. If you are self-employed and fall ill, you may miss out on income, and if it becomes a regular occurrence, it could negatively affect your well-being, ability to make mortgage repayments and ability to save for retirement.

How does this impact self-employed people's retirement savings?

Analysis from The Second Pensions Commission Interim report² suggests that self-employed people remain the group least likely to participate in pensions saving. Only 17% of self-employed people save into a pension, falling to only 4% if you limit the figure to those who only earn from their self-employed work².

Additionally, the "Life courses and pension saving patterns" May 2026 report⁵ from the Department for Work and Pensions highlights how self-employed workers were one of the two groups of people most at risk for never saving (or saving very little) in a private pension during their working life.

These figures seem to suggest that self-employed people are either potentially missing out on opportunities to save for retirement or are deciding to save differently.

What are the other options for self-employed clients?

The latest data from the Office for National Statistics on wealth distribution in Britain analysed household wealth between April 2020 and March 2022⁶ and is therefore from before the height of the increases in the cost-of-living.

Household wealth in Britain is currently distributed as follows⁶:

• Net property wealth = 40%
• Private pension wealth = 35%
• Net financial wealth = 14%
• Physical wealth = 10%

While private pension makes up over a third of wealth in Britain, property wealth remains the largest share, perhaps suggesting that property could be worth considering as part of wider retirement conversations.

This becomes even more relevant when we again consider self-employed workers because they tend to have a larger proportion of wealth in property compared to other full-time employees².

While pensions will always remain a pivotal part of retirement planning, property wealth could also be used in later life as part of a solution to support retirement income and wider financial needs.

The role of Lifetime Mortgages in retirement planning

One highlight from a speech by Emad Aladhal, director of retail banking at the Financial Conduct Authority, was that “later life lending has the potential to become the fourth pillar in retirement, but there is work to do to deliver on that ambition”⁷.

For self-employed clients who have wealth stored in their property, releasing equity could be a solution if their pension pot isn't sufficient.

The most common way people release equity is through a Lifetime Mortgage. With a Lifetime Mortgage, UK homeowners aged 55 and over can release money from the value of their property, and depending on the product they choose, could have a drawdown option that they can access in stages.

However, retirement income planning isn't the only area where property wealth could play a role. Lifetime Mortgages could offer a different option to traditional borrowing in later life.

For self-employed people, income can fluctuate over time¹. When it comes to supplying income evidence of going through affordability checks, remortgaging could then become a more complex process⁴. While a Lifetime Mortgage won't be a solution for all self-employed people in this situation, it could be relevant to your clients if they are aged 55 and over depending on their circumstances. At Royal London Equity Release, 14.2% of our lump sum customers between 01/01/2025 and 01/09/2026 used at least some of their Lifetime Mortgage to pay off an existing mortgage. Taking out a Lifetime Mortgage to clear the existing mortgage could be an option to avoid the potential struggle that comes with remortgaging for self-employed clients.

Adapting your advice approach

Taking a holistic approach to advice is important, especially for clients who may require non-traditional options. Pensions are a key method of financially preparing for retirement. However, they aren't the only way for people to access wealth during this time of their life. Other assets, like property, could be used to support them in retirement.

For your self-employed clients, this could be a valuable option if they have missed out on saving (or saved very little) in a pension during their working life.

Looking beyond: could there be more to your self-employed client's situation than the initial enquiry?

Taking a broader view of your self-employed client's circumstances can reveal opportunities that go far beyond the original enquiry. Where clients haven't been able to save for retirement through more traditional routes, these conversations can help improve customer outcomes while strengthening long-term client relationships.

Download our guide to learn how to spot opportunities and make confident referrals when specialist support may be needed.

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