A shift in attitudes has been identified amongst the ‘retirees of tomorrow’ who are seriously considering using residential property as part of later life financial planning and see this as a ‘reality of ageing’.
These were among the findings in a major report published today by the Equity Release Council (ERC) which tapped into the financial thinking of those aged 45 to 64 – which it dubbed ‘retirees of the future’.
‘Beyond bricks and mortar: the changing role of property in later life financial plans’ has examined how trends in housing wealth are affecting homeowners’ outlook when it comes to their money.
Supporting families
One of the factors examined was supporting younger generations. Indeed, the homeowners quizzed felt they were less likely to view their property wealth as something to leave behind as an inheritance.
Increasingly, instead, they were looking upon their home as a multi-purpose ‘tool’ which could support their own financial plans, be used as a nest egg or to help family members.
The ERC found bricks and mortar accounted for 40p in every £1 of household wealth for people aged 65+, compared to 35p across the nation. This increased to 47p amongst the over 75s.
Call for action
Now the ERC wants more to be done to improve financial education, consumer safeguards and policy planning in order for consumers to tap into this wealth.
It wants a cross-party Late Life Commission and dedicated ‘Minster for the Elderly’ to help roll this out.
David Burrowes, chairman of the Equity Release Council, said a combination of the ageing population and changing retirement landscape meant people were increasingly thinking of property as a multi-purpose financial asset – especially in the 45 to 65 age group.
“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,” he said.
“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.”
Long-term saving
Using property wealth will not be right for everyone, and the ERC was keen to point out that each person’s circumstances were different and people should not let the fact they could tap into their property wealth to distract from long-term savings.
But, it said, considering later-life lending should be on every older homeowners checklist.
Will Hale, CEO of equity release adviser, Key, which supported the report, said: “With pension savings failing to keep up with the increase in longevity, the vast majority of people will need to carefully consider how they maximise all their assets in retirement.
“Whether they conclude they want to use property wealth to fund one-off purchases in later life, a source by which to top-up regular income or to provide a helping hand to the younger generation, ignoring 40% of their net worth just doesn’t make sense.”
