The number of working people over 50 who plan to use their property to fund their retirement has doubled in the last year.
Some 52% of homeowners over 50 are looking to turn the equity in their home into a pension, according to new research from LV=, published today.
That is double the 28% who said they planned to do so last year.
More than half say they will use the money to supplement an insufficient pension pot, while nearly one in five will put funds towards their own care costs. A further 13% plan to help their children or grandchildren pay for expenses such as weddings and schools.
LV= calls them the HIPpies, the "home is pension" generation, and expects many will turn to equity release to fund their retirement.
The average property value for an over-50 homeowner is £258,000, that's £16,000 higher than the national average of £242,000
Five million over-50s own their property outright and even those with a mortgage already have £149,640 worth of equity built up in their home. This means that unlocking the capital in the home should provide many with a significant income boost.
The increase in people using their properties to fund their retirement has been driven by increasing house values and low savings rates.
Vanessa Owen, head of annuities and equity release, said: “The number of over 50s who plan to use their home as their pension has risen steadily since we first launched our report in 2010 and it is clear that for a large section of the population their home is will play a key role in funding their retirement.
"Property is often the largest asset someone has when they reach retirement, especially if they have lived there for quite a while, and will often significantly outweigh any pensions savings they have.
"As our report shows, having invested a considerable amount of time and money in their property, many would prefer to stay where they are and access the cash tied up in their home without having to move.”
More than half of over 50s (52%) would recommend that their children invest in property to fund their retirement. Pensions were the only saving vehicle that proved more popular, with 53% saying they would recommend their children prepare for retirement by investing in a pension.
Vanessa Owen concluded: “With people spending longer in retirement one of the challenges that many need to overcome is how to fund it and how to meet the financial demands they may face in later life, such as the cost of long term care.
“There are numerous ways that retirees can access the capital tied up in their home including deciding to downsize or take out an equity release plan. For those considering unlocking the money in their homes it’s important to seek professional advice and explore all of the options.”
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