Large rise in property prices

Over the last 25 years the average homeowner over 50 owns a home worth over £225,000 and benefited from a 300% rise in house prices.

According to the Office of National Statistics (ONS), the UK’s over 50s own an estimated £2.3 trillion of the nation’s total £4 trillion property wealth.

Currently only 15% of retirees use property to contribute towards their income and this is set to increase to 22% over the next decade.

The most common ways people will use property to fund their retirement include a buy-to-let investment, which will account for 33% of the retirement income for those planning this option. About 1.8 million properties will be sold as over 50s downsize, accounting for 28% of the retirement income using this method.

The over 50s are expected to use equity release accessing an estimated £37 billion by taking out lifetime mortgages. On average, a lifetime mortgage is taken out for just over £90,000 and over 50s planning to do it at some point estimate it will account for 28% of their retirement income.

People are less dependent on pensions

A recent survey from the Financial Conduct Authority (FCA) shows for people that are retired 44% say the State pension is the main source of income at retirement.

For those over the age of 45 that are yet to retire, 29% still expect the State pension will be their main source of income in retirement.

Pension freedoms have allowed people to access their pensions using flexi-access drawdown to meet their increasing income needs.

Nici Audhlam-Gardiner, Managing Director at OneFamily said, It’s clear from the research that homeowners are seeing their property as a cash cow to fund their retirement, and with the dramatic house price rises we have seen, investing in property seems like a wise option.

This is particularly true as we see income from pensions, both state and otherwise, beginning to decrease.

There is a perception that investing in bricks and mortar is a better bet than pensions with 27% say their property is worth more for their retirement than their pension and 15% say pensions simply can’t be relied upon.