‘Significant increase in house prices’ to make strategy ‘more commonplace’
Workers in the UK are looking at different ways to make sure they have enough money for their later life, many of which go beyond contributing into a pension.
Research by Legal & General Home Finance found that 22% of current workers intend to use the value of their home to fund their retirement, including by downsizing or via an equity release.
With house prices soaring over the last few years, the average homeowner could access around £73,000 ($99,295, €87,511), which would greatly improve the retirement of 70% of over-65s who depend on their state pension but who also own a home.
This is especially true for over a third (35%) of non-retirees as they have less than £10,000 in their pension, the firm discovered.
Claire Singleton, chief executive of Legal & General Home Finance, said: “The significant increase in house prices in recent years has likely shifted many people’s expectations of the role property wealth will eventually play in supporting their retirement.
“We anticipate that using your home to fund your retirement will become more commonplace in the future, whether that’s by downsizing to free up funds or releasing money tied up in your home through products like lifetime mortgages. It’s never too early to start thinking about how you plan to fund retirement, and to seek the appropriate advice to get your affairs in order, and for many homeowners their property could be the key to getting the lifestyle they desire.
“Our findings also show there are a large number of people currently in retirement who may be on a limited income and could benefit from the likely increases in the value of their home. It’s important we challenge the discomfort some people still have with using cash from their home to help them achieve better financial outcomes in retirement.”