Over 65s have nearly five times as much in their property than pensions

Michael Lloyd

February 18, 2019

Over 65s have nearly five times as much in their property than their pensions savings, with £1.6 trillion held in property wealth, compared to £336bn held in retirees’ pensions, OneFamily has found.

At a time when the average retirement lasts 18 to 20 years and with an expected income of £24,000 needed a year, if retirees have no other savings, the average pension will last less than two years, even when taking into account state pension payments.

Nici Audhlam-Gardiner, managing director of OneFamily Lifetime Mortgage, said: “As these numbers show retirees will need to look to new sources outside of their pensions for retirement funding.

“With the value of property having risen over many years, it’s no wonder that homeowners are turning to this source of income to fund their later years.

“However currently just one in five (22%) financial advisers are qualified to offer advice on equity release, meaning there is a real opportunity for advisers to get qualified and make the most of what is a quickly growing market.”

With an increasingly large shortfall in pension savings, many homeowners are turning to alternatives such as using their property wealth as a source of income.

A fifth of over 50s (19%) plan to use property to fund their retirement, as they downsize, make buy-to-let investments and unlock the capital in their homes through lifetime mortgages.

Lifetime mortgages are becoming an ever more popular way to fund retirement, and in 2018 nearly £4bn in equity was released, up from £3.06bn in 2017. A lifetime mortgage allows homeowners over the age of 55 to take up to 50% of the equity in their property as a loan.

With £1.6 trillion held in property, that is up to an additional £800bn that could be used as retirement funding.

It is also increasingly easy to manage interest on these loans, like the ones offered by OneFamily, which have the option to make payments either monthly or as and when they wish.

Homeowners have the option to pay either to up 100% of the interest, meaning only the original loan amount would be left at the end, or up to 10% of the capital each year.

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