According to wealth management firm Saltus’ wealth index report, which surveyed 1,000 people in the UK with assets worth over £250,000, 70 per plan to fund at least a quarter of their retirement by leveraging their housing wealth.
On average, high-net-worth individuals plan to fund half of their retirement costs using housing wealth, although one in 50 said they would use it to fund it completely.
Around one in 25 of those aged 25 to 34 said they would use housing wealth to completely fund their retirement and this triples for the wealthiest respondents. Out of this age group, 40 per cent said they would fund up to half of their retirement this way and 30 per cent said they would use it for three quarters of their retirement.
Around a third of those over 65 plan to cover 100 per cent of the cost of their retirement through their property wealth.
Approximately seven per cent of those with assets of £3m or more said housing wealth was their only source of income, and they planned to fund on average 54 per cent of their retirement this way.
Regional overview
From a regional perspective, respondents who planned to use housing wealth to fund at least half of retirement were most likely to be located in East of England, North East, East Midlands and South West.
The average funding amount varied between 50 and 54 per cent in these regions.
‘No substitute for financial planning’
Michael Stimpson, partner at Saltus, said the report showed that most people planned to fund their retirement with some degree of housing wealth.
He continued: “While the temptation to fill gaps in pension pots this way is understandable, it is a fundamentally risky strategy. It depends on residential property continuing to retain its value or even rising in value, which is far from a certainty.
“There really is no substitute for careful financial planning. The best retirement plans are ones where people have been clear about their aspirations and have worked towards their goals in a careful and methodical way in the context of other demands on their spending and saving.”
Stimpson added: “It may not be an easy win, but it is the best way to retire in comfort and with peace of mind after a lifetime of hard work.”
