More People Planning to Use Property to Fund Retirement

According to a recent survey conducted by Barings Asset Management the highest number of respondents’ replies ever received (16%) are saying that they are planning to rent out a property or sell their property to fund retirement

Around 7% which is equivalent to 2.5 million individuals have admitted they are planning on selling their primary residence to fund their retirement

Barings are saying that although property should form part of a risk-adjusted, diversified retirement portfolio, investors need to be aware of the risks of relying on the one asset class.

Barings say this survey result represents a two per cent increase from their research carried out in 2013, making a total of 16% of people ' nearly six million ' saying they are planning to rent out or sell property to fund their retirement. This figure is up from 13% last year and the highest such figure since 2009

The Barings survey found that the economic climate continues to have an impact on people looking to use property to fund some or all of their retirement: the number saying they now plan to sell or downsize a property to fund all of their retirement has risen to 4% from 2% in 2012

Whilst Baring?s research found that a third (33%) of people that last year said they are planning on either selling and/or renting property to fund some or all of their retirement, and have made no changes to their plans. It also revealed that 3% (or 1.3 million people) are now planning to rent out secondary properties (buy-to-let) to fund some or all of their retirement.

Rod Aldridge, Head of UK Wholesale Distribution at Barings, said:

?It is worrying that the number of people relying exclusively on their property to fund retirement has increased again. Property can, of course, form part of a diversified investment portfolio but this year?s research indicates that more people are investing in property as a retirement source and this could mean they are too concentrated in the asset class ' property.”

The research also showed that despite a rise in the number of people using property as a retirement source, the number of people saying they have 'never planned' to use property to fund their retirement rose significantly ' from 35% in 2013 to 52%.

The West Midlands is where people are potentially most exposed to property, with 6% of people saying they plan to sell their primary residence to fund their retirement and 21% saying they plan to sell or rent other secondary properties. Wales is potentially least exposed with 5% of people saying they plan to sell their primary residence to fund their retirement and 5% to sell or rent other properties.

Rod Aldridge comments:

?The level of risk involved in expecting to fund your retirement through the use of a volatile asset such as their own home or from other properties such as buy-to-let should be fully appreciated and understood. Investing for your retirement is about long-term planning and as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded. It is imperative that people diversify their investments through a range of assets which can, of course, include property.?

www.barings.com/global/index.htm?r=uk

... LandlordZONE.

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Article courtesy of LandlordZONE
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