Young people expect property to play part in financing retirement
The Pensions and Lifetime Savings Association (PLSA) today released research looking at how 35-85 year olds currently use or plan to use property to fund their retirement.
With approximately two million people in the UK having used their property to finance retirement, downsizing was the most popular option with 11% while 4% said their property was used for buy to let and letting holiday homes.
Re-mortgaging was the least common choice at 1%.
The PLSA found that 73% of those who had used their property to finance their retirement felt they had made the right choice and 55% of those who released capital from their property said they had put it into savings.
However when it came to other generations, young people are more likely to think of their property as part of their retirement planning.
Of the six million people in the UK who are not retired and home owners with a mortgage, 53% thought their home would play a part in financing retirement, even though 13% don’t expect to pay off their mortgage before they retire.
More than a third (33%) of 35-44 year olds feel they will have no choice but to use their property to finance retirement.
Across all age groups though, only 18% agreed with the ‘my house is my pension’ attitude.
Joanne Segars, chief executive of PLSE, said: “Retirement simply doesn’t look like it used to – the lines are blurring between work and retirement, between pensions and other forms of saving. Pensions, even great workplace pension schemes, don’t operate in isolation any more. They interact with other savings, and as an industry we need to adapt in order to help savers adequately prepare for retirement.
“We’re all familiar with the phrase ‘my house is my pension’ but these headlines from our research illustrate it’s not so straightforward. Some retired people have been happy to use their property to fund their retirement and feel confident about the decision they’ve made, whereas others felt they had no choice.”
Jackie Spencer, pension and retirement expert at the Money Advice Service, said: “We welcome the report findings that highlight that attitudes to using property as a pension is changing. There are many ways to save and plan effectively for retirement with property being only one aspect of people’s overall financial picture.”
To see your options, visit the Money Advice Service retirement hub.