Save, make, understand money


Retirement costs dent homeowners' financial confidence

Retirement costs dent homeowners' financial confidence
Shekina Tuahene
Written By:
Shekina Tuahene

People around retirement age – between 65 and 74 – are the least confident about their personal finances for the future, a survey has found.

A study from the Equity Release Council (ERC) found that people who were around retirement age had suffered the greatest loss in confidence, with 39% worried about the future, compared to 18% in 2021. 

The trade association’s biannual Home Advantage study, supported by Canada Life and Equity Release Supermarket, polled 5,000 UK adults and found that among 16- to 24-year-olds, 44% had a lack of confidence, compared to 37% in 2021. 

Over the same time period, worries about future finance were prevalent among 41% of 25- to 34-year-olds, up from 39%, while 47% of 35- to 44-year-olds had concerns, up from 35%. 

For 45- to 54-year-olds, 55% were worried about their finances in the future, a change from 45% in 2021. Among 55- to 64-year-olds, this rose from 37% to 51%. Some 23% of those aged over 75 had concerns, up from 11% three years ago. 

Overall, 46% of the people surveyed did not feel confident about their future finances, up from 35% in 2021. 

Additionally, 57% of respondents said their financial situation had worsened in the last year, while 14% saw an improvement. 

This study follows research from the Pensions and Lifetime Savings Association (PLSA), which found the cost of a ‘moderate’ retirement had risen by a third, or £8,000, since last year. 

Mortgage pressure impacting retirement confidence

A fifth of homeowners with a mortgage said their loan was unaffordable and 30% said they had used or planned to use their pension savings to pay it off. This rose to a third among single homeowners. 

The burden of paying off a mortgage is heightening financial worries, the study found, as 37% of homeowners said they found it difficult to build up their pension savings to feel confident around living standards in retirement. Some 41% were concerned about using their pension savings too quickly. 

Women felt the least confident, as shown by the 44% who were worried about using their pensions savings too soon, compared to 39% of men. Two-fifths of women said they had not managed to save enough towards their pension to feel confident, compared to 35% of men. 

This comes after a report from Now: Pensions that suggested women would need to pay into their pensions for an additional 19 years to match the contributions men made to their savings. 

Jim Boyd, chief executive at ERC, said: “The deterioration of confidence in our future finances since the Covid pandemic is shocking, particularly among those about to retire. More people are having to make hard choices that will potentially have a long-term impact on their financial security. 

“Mortgage repayment pressures mean many households are planning to use their pensions to pay off mortgage debt, possibly at the expense of a comfortable retirement, while others are struggling to pay these higher mortgage costs during their working lives, which is limiting the amount they can save into their pension. Although many hope to retire debt-free with a healthy pension pot, we mustn’t forget the millions who can’t save or pay down their mortgages and encourage them to consider all their options including property wealth. 

“I am concerned that homeowners and their families might be struggling to get by when the wealth locked up in their properties could fund far better lives in retirement. Anyone lucky enough to own a home should give careful thought to how lifetime and later life mortgages can support their finances, and not overlook options that are literally on their doorstep.”