Official figures on household finances showing older people have far more money tied up in
property than pensions provides further evidence for the potential of equity release to help
‘asset rich, income poor’ pensioner homeowners, says Just Retirement.
The latest household wealth report showed that in Great Britain two-thirds (66 per cent) of over-65 households – more than 6 million individuals – have more £100,000 or more property wealth, but only 42 per cent had more than £100,000 in pension wealth.
“We live in a country where people have often prioritised buying a home and paying off a
mortgage over building up a pension, so it’s perhaps not surprising to find property wealth
outstripping pension wealth,” said Stephen Lowe, Just Retirement’s group external affairs
and customer insight director.
“However, the consequences of that decision show up at retirement when people need to
secure an income that can sustain them for many years. This is particularly true at a time
when standard annuity returns have been squeezed to the point even a six-figure pension
pot can’t meet people’s hopes for an adequate income. Yet many are sitting on considerable
property wealth.”
He urged those heading into retirement to seek professional advice in order to plan how best
to deploy all their assets during retirement, to help secure the income they need and to
prepare for uncertainties such as illness or care needs.
“Equity withdrawal either through downsizing or equity release has the potential to help
many of those homeowners in the “squeezed middle”,” he said. “One in four (26 per cent) of older households have pension assets worth between £20,000 and £100,000 but the figures
suggest many of these same people will have property wealth of over £100,000. This gives
them options and could be an important lifeboat during retirement.
“Advisers have played an important role in helping clients mitigate inheritance tax in the past
but as recent surveys have shown, people are becoming less willing to sacrifice their own
living standards to pass on money when they die. Moving forward there are good
opportunities for advisers who can help people factor property wealth into retirement
planning whether that is for income, care needs or inheritance.”
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