Over a quarter (28%) of working homeowners over the age of 50 (about 1.9m people) plan to access the equity in their home to help fund their retirement, according to retirement specialist LV=, dubbing them the HIPpies (home is pension) generation.
The LV= 2012 HIPpies report reveals that despite low confidence in the housing market, many working over 50s still believe their home will play a significant part in funding their retirement. While over a quarter are planning to use the equity in their home, nearly half (49%) of working homeowners over 50 say they would consider downsizing to a smaller property, or using an equity release product (17%) to access the money in their property during retirement.
However, many over 50s are faced with the reality that their house may not be as valuable as they had once hoped, with 39% of working homeowners over 50 believing their property has decreased in value over the last three years by an average of £21,749 – amounting to about £58bn collectively.
In order to maximise the money they could use from their property, 18% of working over 50s who believe their property value has fallen aim to wait for their property value to improve before considering using the equity to help fund retirement, and a further 9% plan to make improvements to their home to try and increase its value. Despite the uncertainty in the housing market, more than half (54%) of working over 50s with children would recommend their child invests in property to fund their retirement.
With finances being stretched from all angles, it is no surprise that over a third (35%) of working over 50s admit they may need to delay their retirement for financial reasons, with an additional fifth (20%) looking at ways to boost their retirement income before they retire such as taking a second job or taking in a lodger. One in seven (14%) will be retiring when they planned; however will take a lower income in retirement than they originally thought they would. Worryingly one in six (16%) would rather not think about their retirement finances at all.
Vanessa Owen, LV= Head of Equity Release said: “Turbulent times are still ahead for the UK economy, but despite the uncertainty surrounding the housing market our HIPpies generation have not been discouraged. The number of over 50s planning to use their home as their pension has remained stable when we compare it to our 2011 report. A property is often the largest asset people have, so it makes sense for them to see it as a way of helping to provide an additional stream of income for them when they retire.”
Article courtesy of Property Investor Today