With fresh analysis revealing that national property wealth has surpassed £4 trillion, a growing number of older homeowners are now factoring property into their retirement plans.
A new report from the Equity Release Council has found that just over half - 51% - of homeowners aged 45-plus now see money invested in property as part of their financial plans for later life.
This comes as the World Economic Forum reports that the average person in the UK will live 8.5 years longer than their retirement savings will last, highlighting the need for alternative sources of finance in later life to supplement traditional retirement income.
The study found that older households depend the most on property as a source of finance - making up 40p in every £1 of over-65s’ wealth and 47p among over-75s.
Some 68% of homeowners see property as the most important contributing factor to their financial comfort in later life, while 56% feel they can benefit from its financial value while they still live there.
Those who are currently aged 45-64 are less likely than their older counterparts to see property as something to leave behind as an inheritance, according the research. Instead, they are more likely to think of it as a multi-purpose financial tool that can support their own financial plans (55%), be used as a nest egg to meet unexpected expenses (49%) or help family members (25%).
Some 44% of over-45 homeowners feel taking out a mortgage or loan to access property wealth in later life is becoming a more common way to manage money, while 40% see it as a “reality” of ageing.
Just 34% feel they have no need to consider this option either now or in future, including just 30% of those aged 45-64.
David Burrowes, chairman of the Equity Release Council, said: “The UK’s ageing population and changing retirement landscape means people are increasingly thinking of property as a multi-purpose financial asset – particularly those aged 45 to 64, the retirees of tomorrow. Property is often a person’s single largest asset and makes a significant contribution to homeowners’ personal finances as well as providing a place to live.
“Changing attitudes to property are significant given the financial challenges facing our ageing population as they seek to live longer, healthier lives. Many people have made inadequate provision for their retirement and care needs, while others have younger family to support. Consequently, bricks and mortar have become a vital piece of the retirement funding jigsaw, to benefit people during their lifetime as well as their families.
“Our calls to action are underpinned by the core belief that – while drawing on property is not right for every circumstance and should not distract from encouraging long-term saving – it should be on every homeowner’s checklist to consider in later life, now more than ever. We urge industry and policymakers to evolve their thinking to reflect that of older homeowners to support this emerging demand.