The latest analysis from the Equity Release Council has revealed that 51% of homeowners aged 45 and over see money invested in property as part of their financial plans for later life.
According to the report, as national property wealth passes £4tr, older households depend the most on this source of finance - making up 40p in every £1 of over-65s’ wealth and 47p among over-75s, rising to 47p among the over-75s.
The report also suggests these shifting trends are driving a change in attitude among the over-45 homeowner population. These homeowners see property as the most important contributing factor to their financial comfort in later life (68%), and over half (56%) feel they can benefit from its financial value while they still live there.
The retirees of tomorrow – those aged 45-64 – are less likely than their older counterparts to see property as something to leave behind as an inheritance. Instead, they are more likely to think of it as a multi-purpose financial tool that can support their own financial plans (55%), be used as a nest egg to meet unexpected expenses (49%) or help family members (25%).
More than two fifths (44%) of over-45 homeowners feel taking out a mortgage or loan to access property wealth in later life is becoming a more common way to manage money, while 40% see it as a “reality” of ageing. Only 34% feel they have no need to consider this option either now or in future, including just 30% of those aged 45-64.
As a result the Council has called for more action from the industry, regulators and government to support financial education, product development, consumer safeguards and policy planning. This includes establishing a cross-party Later Life Commission and a dedicated Minister for the Elderly.
David Burrowes, chairman of the Equity Release Council, commented: “The UK’s ageing population and changing retirement landscape means people are increasingly thinking of property as a multi-purpose financial asset – particularly those aged 45 to 64, the retirees of tomorrow. Property is often a person’s single largest asset and makes a significant contribution to homeowners’ personal finances as well as providing a place to live.
Changing attitudes to property are significant given the financial challenges facing our ageing population as they seek to live longer, healthier lives. Many people have made inadequate provision for their retirement and care needs, while others have younger family to support. Consequently, bricks and mortar have become a vital piece of the retirement funding jigsaw, to benefit people during their lifetime as well as their families.
Our calls to action are underpinned by the core belief that – while drawing on property is not right for every circumstance and should not distract from encouraging long-term saving – it should be on every homeowner’s checklist to consider in later life, now more than ever. We urge industry and policymakers to evolve their thinking to reflect that of older homeowners to support this emerging demand.”