Pensioners with lowest incomes have highest levels of homeownership

Michael Lloyd

April 23, 2018

Pensioners with the lowest incomes have among the highest levels of homeownership, Just Group’s analysis of government data showed.

The latest ONS Household Disposable Income and Inequality figures showed that in 2016/17 the home ownership level among retired households with the lowest disposable incomes (the first decile with average income of £7,619 a year) was 89%.

This is equivalent to nearly 660,000 households, 40,000 higher than three years earlier. That level of homeownership is far higher than the 66% for those in the lower middle income band (fifth decile with average annual income of £17,493).

It is almost as high as the richest 10th (with an income above £55,365 a year) where 94% own their own home.

Stephen Lowe, group communications director at Just Group, said: “Property is often claimed to be the best way to save for retirement but looking at the figures it is striking that among the retired, higher home ownership levels doesn’t equate to higher income.

“In fact, we see that both the poorest and the richest pensioners are among the most likely to own their homes, with those who live on average incomes less likely to do so.”

He said that the figures should make working people think about saving more into pensions as the most reliable way of providing an income stream.

Meanwhile, those in retirement who are struggling on low incomes, a high proportion of them likely to be homeowners, should check that they are claiming their state full benefits and consider ways to access capital tied up in the property.

Property is considered a good investment for retirement. Government figures for 2016/172 show that half (49%) of those who are not retired think saving in property will make the most of their money.

This is a rise from 40% five years ago and far higher than the 28% who favoured workplace/personal pensions.

Nearly a quarter (23%) said they plan to sell their home and downsize in retirement.

Lowe added: “It is worth pointing out that it is how much you accumulate in State, employer and private pensions that appear to make most difference to how much income you have in retirement.

“That’s a strong argument in favour of ratcheting up pension auto-enrolment minimum contributions and encouraging the self-employed to pay into pensions too.

“It is also noticeable too that the pensioners with the lowest incomes also receive the lowest benefits. It’s important they make sure they are claiming their full entitlement and not be put off making inquiries just because they may own a property.

“Overall, the message is that building up a pension is one of the best tools for delivering retirement income but those with property do have choices. Either way, people need to ensure they take guidance and advice to use their assets wisely.”

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