In the study of more than 1,000 homeowners aged 55 and over, two thirds of baby boomers blame the rising cost of living for not being as comfortable as they had hoped and almost half believe poor interest rates have dented their savings. Property wealth is expected to become increasingly important in the financial planning of many who are in and approaching retirement.
While the average pension pot of someone over 55 is around £105,4962, SunLife’s research found that they have around £280,000 of equity in their homes, and that eight in ten homeowners are ready to use their housing wealth to fund retirement options with a third considering equity release to access some of the value tied up in their home.
SunLife’s CEO Dean Lamble says: “In some ways, there has never been a better time to retire – we’re living longer, enjoying healthier, more active lifestyles, and thanks to the new flexible rules around pensions, we have more freedom to spend our pension savings as we choose. But with the average pension pot of someone over 55 around £105,000, many don’t want to take out a lump sum and so reduce their pension income further, and people are clearly worried that they haven’t got a big enough pension to fund their retirement.”
With property wealth among the over 55s estimated at around £4trillion3, they are increasingly turning to equity release to bridge the gap, with someone in the UK releasing equity every 15 minutes, and the average sum arranged is over £101,0004 – almost identical to their average pension pot.
Dean Lamble continues: “We know people over 55 want a cash fund for many reasons – whether to pay for home improvements, pay off a mortgage or just have more money to live on each month. Our research shows 90% of younger people don’t think their parents are ‘spending too much of their inheritance’ and that only one in five is relying on an inheritance. So, it’s perhaps not surprising that our research shows that less than half of people over 55 are planning on leaving their house as in inheritance. Instead they are realising the potential of an asset that’s risen in value markedly over the years by turning to equity release.”
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