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One in five over 50s plan to use property wealth to fund retirement

  • 18/06/2018
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One in five over 50s plan to use property wealth to fund retirement
One in five over 50s – around 3.9 million people – plan to use some of their property wealth to fund their retirement.

This increasing trend is being driven as a result of soaring property prices over the last 20 years, as well as decreasing pension pots and longer retirements, according to research by financial services company OneFamily.

The UK’s over 50s have particularly benefitted from increasing property prices, now owning an estimated £2.3trn of the nation’s total £4trn property wealth.

And the number of over 50s using property to contribute towards their income is expected to increase, from one in seven now to one in five over the next decade, according to OneFamily.

The most common ways people will use property to fund their retirement include a buy-to-let investment, which will account for 33% of the retirement income for those planning to do it.

It’s estimated around 1.8 million properties will be sold as over 50s downsize, accounting for 28% of the retirement income for those planning to do it.

The UK’s over 50s are predicted to access an estimated £37bn by taking out lifetime mortgages.

On average, a lifetime mortgage is taken out for just over £90,000 and over 50s planning to do it at some point estimate it will account for 28% of their retirement income.

Property reliability

More than a quarter of over 50s who have or plan to use property to fund their retirement say that property investments are more reliable than pensions.

A similar number say their property is worth more for their retirement than their pension, and 15% say pensions simply can’t be relied upon.

Advice provides the answers

The research also revealed that many people may not have fully explored the options available to them when planning their finances for retirement.

Only 37% of over 50s have or plan to consult professional financial advice.

However, of those that had used financial advice, the vast majority – 84% – felt it was useful or essential to their financial planning, particularly when it came to considering different products, such as lifetime mortgages or enhanced annuities, which they otherwise would not have considered.

Nici Audhlam-Gardiner, managing director at OneFamily Lifetime Mortgages, said: “It’s clear from the research that homeowners are seeing their property as a cash cow to fund their retirement, and with the dramatic house price rises we have seen, investing in property seems like a wise option.

“This is particularly true as we see income from pensions, both state and otherwise, beginning to decrease. Those not taking advice may often not realise that as well as downsizing there are other options to fund your later years, whilst saying in your forever home.”

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