Over 50s increasingly turning to property wealth to fund retirement

One in five over 50s in the UK — around 3.9 million people — plan to use some of their property wealth to fund their retirement, according to research by OneFamily.

There are several ways of doing this, such as downsizing, making buy-to-let investments, or unlocking the capital in your home through a lifetime mortgage.

This increasing trend is being driven by soaring property prices over the last 20 years, as well as decreasing pension pots and longer retirements, the financial services company said.

Across the UK, house prices have risen by over 300% in the last 25 years and homeowners over the age of 50 have particularly benefited.

While currently one in seven (15%) retirees use property to contribute towards their income, this is set to increase to one in five (22%) over the next decade, OneFamily found.

Some feel that investing in bricks and mortar is a better bet than pensions. Over a quarter (26%) of over 50s who have or plan to use property to fund their retirement believe that property investments are more reliable than pensions, 27% said their property is worth more for their retirement than their pension, and 15% feel that pensions can´t be relied upon.

However, the research also suggested that many people may not have fully explored the options available to them when planning their finances for retirement. Only 37% of over 50s have or plan to consult professional financial advice — but among those that had used financial advice, the vast majority (84%) felt it was useful or essential to their financial planning, particularly when it came to considering different products, such as lifetime mortgages or enhanced annuities, which they otherwise would not have considered (46%).

Commenting on the findings, Nici Audhlam-Gardiner, managing director of OneFamily, said: “It´s clear from the research that homeowners are seeing their property as a cash cow to fund their retirement, and with the dramatic house price rises we have seen, investing in property seems like a wise option. This is particularly true as we see income from pensions, both state and otherwise, beginning to decrease.

“Those not taking advice may often not realise that as well as downsizing there are other options to fund your later years, whilst saying in your forever home. We´d urge homeowners approaching retirement to consider all the options open to them, and speak to a financial adviser, as how you fund retirement is one of the most important financial decisions you will ever make.”