The research examined people’s approaches to financial planning for later life and found 65% were struggling to save while only 16% showed signs of being “savvy and sorted”.
Nigel Waterson, chairman of the Equity Release Council, said: “When people’s budgets are under pressure right now, it is perfectly understandable why many prefer to focus on the present and not dwell too much on their financial future, especially if their outlook for retirement is less than sunny.
“Unfortunately that inaction could prove costly in later life. Seeking out professional advice on a range of retirement products, from pensions and annuities to equity release, can help to identify the best way to make their financial assets work for them in later life.”
The findings suggested five distinct personality types exist. Of the 65% who are struggling to save: one in three (30%) are “hassled and overstretched”, nearly one in five (19%) are “in denial” about the issue and a further 16% are “lost and confused” about the steps they need to take.
Just 16% of adults showed signs of being “savvy and sorted” by taking a conscientious approach to saving for retirement and a further 19% are “cautious optimists” who appreciate the need for action and are confident they still have time to prepare.
Waterson added: “Even without factoring in the current rise in prices, housing wealth is often the logical choice to provide a financial comfort blanket during retirement. Rather than worrying about being forced to sell off what is their most sizeable asset, homeowners can look on their property as a valuable investment that can grant them peace of mind through the safe withdrawal of housing equity.”
Recent data published by the Office for National Statistics showed that while 76% of UK households currently save into a pension the amount of savings needed to fund a regular retirement income has grown substantially since December 2009.
In 2013, a savings pot of £458,300 is needed to receive an annual retirement income of £15,000: 29% more for men than was needed in 2009 when the savings target was £354,100, and 14% more than for women in the same year when they needed £400,600.
The research also revealed nearly one in ten UK adults believe they will eventually have to sell their homes as they would no longer be able to afford to live there in retirement.
With rising house prices and tight lending criteria continuing to limit access to the property ladder, almost one in five (18%) doubted whether they would even own their own homes by the time they retired.
However nearly one in three (32%) adults saw their home as a potential financial asset in retirement, as well as somewhere to live, in case they ever needed to release equity to boost their savings.
Stephen Lowe, director of Just Retirement, said: “Our experiences are very similar to those reported by The Equity Release Council. In the consumer research study Just Retirement commissioned into people’s attitudes towards using housing equity, we found a significant gap between expectations of those approaching retirement and the reality of their financial situation. There is also lack of knowledge about the options people have, including equity release.
“As people start to understand the significant gap between their finances and what’s needed to deliver an acceptable retirement, increasing numbers are becoming positively disposed to using housing equity. It is important people considering using housing equity seek professional financial advice in order to fully understand the options available and the implications of different routes.”