Six million over-45 homeowners see property as key to retirement income

Robyn Hall

July 27, 2016

house green country

Long term growth in UK house prices and homeowners’ lasting attachment to their homes mean people are turning attention towards property wealth to help manage their finances and boost retirement incomes, the latest Aviva Real Retirement Report reveals.

Some 46% see property wealth as a key part of retirement income planning, with 69% owning a home worth more than their pensions, savings and investments.

But 23% of mortgaged over-45s are still worried about paying off their loans: equivalent to 1.02m UK households owing £85,634 each and £87.2bn in total.

Over 7 million homeowners didn’t have a survey before buying

Clive Bolton, managing director, Retirement Solutions, Aviva UK Life, said: “Pension freedoms have resulted in new decisions for people to make about how they use their life savings, and these findings suggest we are also starting to see a shift in attitudes towards wider use of property to help fund retirement, as well as providing a place to live.

“Property assets more than match pension wealth for many older homeowners, so it is sensible to consider bricks and mortar among the options to supplement their savings.”

But Bolton added: “However, later life brings a host of financial challenges and pressure points, which suggest it would be wise not to place all retirement bets on the house. The equity build up in people’s homes sounds like a lot, but considering that many can be retired for 20 years or more and often want to help their families as well as themselves, it’s easy to overestimate how far that money will take them. People need to consider if there is enough house to go around and build this into their retirement plans alongside their other assets.”

The research also showed that having lived in their current home for 21 years on average, 80% of over-45 homeowners want to remain there for as long as they physically can and that one in six (16%) expect to need to borrow in retirement – equivalent to 2.12m households – with over half relying on this to stay in their homes.

One in three (31%) have or plan to give money to help a child become a first time buyer – adding to pressure on retirement funds and some 56% expect housing wealth will be needed to pay for care in later life, while 61% see it as a key part of their inheritance planning.

Bolton said: “As well as boosting day-to-day funds, people also earmark their property wealth to help pay for care, leave an inheritance and help younger generations onto the housing ladder.

There are also widespread worries about paying off mortgages to address in later life, along with a general desire to avoid needing to move from the place they call home.

“Aviva is committed to helping people save smarter for retirement and draw on a blend of support and solutions to make the most of all their available wealth.”