Almost three quarters of advisers believe more pensioners should use their property as a source of financial support, new research found.
A survey carried out by equity release specialist Stonehaven revealed that 74 per cent of advisers recommend including your property in your asset mix during retirement.
The same proportion of the experts supports the opinion that equity release will grow in importance for people aged 55+ after the changes to the annuity market. Equity release lending climbed to an all-time high of £1.4 billion last year, according to data from the Equity Release Council.
Advisers also anticipate that using their home for money will become normal for many retirees. In fact, 88 per cent of the experts see the start of this change in view from April 2015.
Equity release is bound to grow in popularity from April chiefly because it is viewed as a way to enhance the quality of living in later life. As much as 73 per cent of the advisers said they expect retirees to spend the extra income generated from their properties on luxuries such as travel.
Another big part of the experts (70 per cent) believe that retired people will unlock property capital to pay for day-to-day living expenses as they have exhausted their savings pots.
Alice Watson, product and communications manager at Stonehaven, comments:
“We are entering a period of uncertainty in the pensions market as retirees are afforded new freedoms to spend their savings as and when they wish. While this flexibility is good news for savvy retirees, recent research has shown that a number of retirees may choose to use their pension pot for luxuries and gifting to family instead of using it for an income over the long-term.
“Retirees may find that their calculated expenditure cannot keep up with the rising cost of day-to-day living or that buying a well-earned holiday in retirement is stretching their finances a step too far.
“Equity release is fast becoming the runaway success story of the UK mortgage market, and providers can boast an increasingly flexible and transparent product which the industry can be proud of and sell with confidence. With April 2015 pension reforms just around the corner and annuity rates at and all time low, more advisers will need to become qualified in order to service the expected growth in the market and provide users with suitable retirement planning advice.”
