A fifth of UK workers plan to use property to fund retirement

More than one in five (22%) of current workers are planning to use the value of their home to fund their retirement following record house price increases, according to a study from Legal & General Home Finance.

The average homeowner in England and Wales could access £72,988 in equity release based on L&G’s analysis of median house prices.

L&G also suggested this could greatly improve the retirement for seven in 10 (70%) over-65s who are “state pension dependent” but also homeowners. The research indicated that a third of all people who aren’t currently retired (35%) own a property but have less than £10,000 saved in their pension pot, while a further 22% of people hold no pensions savings at all.

This significant number of small or empty pots, coupled with the 24% increase in median house price values in England and Wales since 2016, could be driving more people to consider using their property wealth to fund their retirement. According to the findings, people who aren’t currently retired expect to downsize their property (10%), sell their property (9%) or access equity via a lifetime mortgage (6%) to help fund their later life.

Legal & General Home Finance CEO, Claire Singleton, said that house price growth in recent years has “shifted” many people’s expectations of the role property wealth will eventually play in supporting their retirement.

“We anticipate that using your home to fund your retirement will become more commonplace in the future, whether that’s by downsizing to free up funds or releasing money tied up in your home through products like lifetime mortgages,” Singleton commented.

“It's never too early to start thinking about how you plan to fund retirement, and to seek the appropriate advice to get your affairs in order, and for many homeowners their property could be the key to getting the lifestyle they desire.

“Our findings also show there are a large number of people currently in retirement who may be on a limited income and could benefit from the likely increases in the value of their home. It’s important we challenge the discomfort some people still have with using cash from their home to help them achieve better financial outcomes in retirement.”

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