Newly released research from Key has revealed that around 30% of people who are due to finish full-time work in 2020 are planning to use their property wealth to help boost their retirement income.
The study into the finances and ambitions of over 1,000 people expecting to finish full-time work in 2020 shows they own property worth more than £142.5 billion with an average of £388,900 each. 46% suggested that they will look downsize to a smaller property, while 23% will consider equity release or re-mortgaging.
But the study found just 40% of property owners say they are happy with their expected retirement income and do not need to consider their property wealth.
Focusing on inheritance and worried about borrowing
The biggest reason for not using property wealth in retirement is the desire to leave an inheritance to family – 16% of homeowners want to leave the house to their family. However, 15% are worried about borrowing money and a further 15% do not want to move.
Other reasons for not using property wealth in retirement include concern about the reputation of equity release (8%) and fear of making a mistake (6%), the research found.
Will Hale, CEO at Key, said: “Property wealth is established as a major factor in retirement planning with one in three people retiring this year looking to the money invested in their home as a way of supplementing their income.
“With people retiring this year owning homes worth an average of £388,900 and total property wealth of £142 billion there clearly is a lot of wealth that could be used in retirement. Many will not need to use their home as part of retirement planning, but it is worrying if people are not taking property wealth into consideration due to a lack of awareness of the options available to them or as a result of myths or misconceptions about products.
“Our research shows many are worried about borrowing money or moving to a new house while others are concerned about making mistakes. These customers could benefit from information and advice when assessing their options for using property wealth and, while equity release is not right for everybody, modern lifetime mortgages with low rates and flexible features such as the ability to service interest or repay capital mean that they offer potential solutions for a wider range of customers than ever before.”