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Property is pension for almost half of over-45s

Property is Pension

Almost half of homeowners aged 45+ expect their property wealth to play a key role in their retirement income planning, according to recent figures.

The latest Real Retirement Report by Aviva has revealed that thousands of homeowners are relying on their property to assist them in retirement – despite a quarter of respondents stating they do not intend to downsize.

Over 45’s attitude to property wealth:

  • 46% see property wealth as a key part of retirement income planning
  • 69% own a home worth more than their pensions, savings and investments
  • 52% feel they could benefit from using their home as an extra source of income in later life
  • 56% expect their home’s equity will be needed to pay for care in later life
  • 61% see their housing wealth as a key part of their inheritance planning

Debt vs prosperity in retirement

Despite more than two thirds owning a home worth more than their pensions, savings and investments, the figures reveal almost a quarter of over-45s with a mortgage are still worried about paying off their loans. This equates to 1.02m households owing on average £85,634 each.

Unfortunately, 16 per cent of the respondents believe they will need to borrow well into their retirement in order for them to stay in their homes; and a small percentage (4%) think they will never pay off their mortgage, this equates to 177,101 households in the UK.

Not everyone in the report had concerns about debt in retirement, however. The report also revealed that a third of over-75s expect their property wealth will be used to help them better enjoy their retirement.

The solution to later life borrowing?

With so many relying on their property to provide them with a cash boost or reserve for their retirement, how are they intending to access their money?
Downsizing is an option, yet only a quarter of people in the survey have downsized or plan to in the future. Having lived in their current home for 21 years on average, a resounding 80 per cent want to remain there for as long as they physically can.

This is understandable, of course. Selling the family home to move into somewhere smaller can be distressing and unsettling for many people in later life; and simply not an option for others who perhaps have already downsized in retirement. Fortunately, there are alternative options to consider.

One of these is equity release. Homeowners aged 55 and over can access their property wealth by arranging a lifetime mortgage to unlock a tax-free cash lump sum, without the need to sell their home.

With 31% in the survey planning to give money to their children to become a first time buyer, a lifetime mortgage could help them to achieve this without having to move themselves.

Equity release could also help those worried about repaying loans and mortgages into their retirement. By unlocking a cash lump sum from their property, over-55s can get on top of their money problems and enjoy a bigger disposable income to boost their day-to-day finances.

Speak to a specialist

With lenders currently battling it out to offer some of the lowest rates on record, now could be an ideal time to boost your own retirement income with equity release.

There are a wide variety of flexible new plans available that can be expertly tailored to your individual needs. With so many options to choose from, it is always recommended to seek the guidance of an independent specialist in retirement lending before making a decision.

Your Bower specialist will take the time to explain all the advantages and disadvantages of each type of plan so you can make an informed choice. They will also explain how equity release will reduce the value of your estate and will reduce the amount of inheritance you leave.

Speak to us today to arrange your free, no-obligation initial consultation on [tel].