Housing wealth is becoming an increasingly important source of financial comfort in retirement, particularly from the perspective of younger generations, according to equity release lender more2life.
Commenting on the Office for National Statistics (ONS) Wealth and Assets preliminary data, which found that a quarter of British people thought property investment would be the best way to fund retirement, Dave Harris (pictured), CEO of more2life, said: “The ONS’ latest findings clearly show a significant trend among Britons wishing to use property wealth to help fund their later years.
“With more than two-fifths of people (43%) believing property will be the single largest contributor to their retirement income, housing wealth is clearly going to play an increasingly important role in the lives of retirees.
“Interestingly, it seems as though younger generations view property wealth as being the most important source of income when they reach retirement.
“Nearly half (47%) of those aged between 35 and 44 think property will be the biggest contributor to their retirement income.”
This trend comes as a result of waning confidence in other, traditionally solid methods of saving for retirement, Harris added.
He said: “Rising living costs and less generous defined contribution pension schemes may be a driving force behind this.
“Indeed, research from the Equity Release Council shows that a typical defined contribution pension will deliver just 20% of the guaranteed retirement income of a typical defined benefit pension.
“People approaching retirement now are often faced with a significant challenge – needing to fund a longer and more active retirement than their predecessors, but with a much smaller income.
“For those in this situation, property wealth could be an invaluable lifeline, and products like equity release have proven popular among ‘asset rich, cash poor’ retirees looking to make the most of the built-up equity in their homes.
“Homeowners, with the guidance of advisers, should consider how all of their assets – including property – can work together to form a holistic financial plan in retirement.”