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Over-45s include property in retirement plans Image

16th June 2019
Over-45s include property in retirement plans

The latest analysis from the Equity Release Council has revealed that 51% of homeowners aged 45 and over see money invested in property as part of their financial plans for later life.

According to the report, as national property wealth passes £4tr, older households depend the most on this source of finance - making up 40p in every £1 of over-65s’ wealth and 47p among over-75s, rising to 47p among the over-75s.

The report also suggests these shifting trends are driving a change in attitude among the over-45 homeowner population. These homeowners see property as the most important contributing factor to their financial comfort in later life (68%), and over half (56%) feel they can benefit from its financial value while they still live there.

The retirees of tomorrow – those aged 45-64 – are less likely than their older counterparts to see property as something to leave behind as an inheritance. 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%).

More than two fifths (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. Only 34% feel they have no need to consider this option either now or in future, including just 30% of those aged 45-64.

As a result the Council has called for more action from the industry, regulators and government to support financial education, product development, consumer safeguards and policy planning. This includes establishing a cross-party Later Life Commission and a dedicated Minister for the Elderly.

David Burrowes, chairman of the Equity Release Council, commented: “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.”

Alice Watson, head of marketing and communications at Canada Life Home Finance, added: “The retirement landscape is beginning to take on a different shape for the next generation of retirees. Crippling care costs, pension reforms and an underestimation of life expectancy have uprooted retirement expectations and thrown into question whether people will have enough income in later life. Equity release is increasingly being used to bridge this financial gap.

There is a notable shift in people’s attitude towards using their property wealth to boost their retirement income. Canada Life research found that the younger generation is three-times more open to unlocking wealth from their property in retirement compared to the older generation. This is a chance for the industry to demonstrate to tomorrow’s retirees that lifetime mortgages can help provide them with the sort of lifestyle they’re hoping for.

With more consumers open to using their property wealth in the future, it’s crucial that there is a growth in equity release-qualified advisers. That is why we have organised a series of workshops designed to help advisers either become qualified, or to make the most of their existing qualifications. Education and innovation in the equity release sector will be crucial to helping consumers enjoy their later life.”

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