Millions of UK households are forecasted to need housing wealth to pay for their desired lifestyle in retirement, a new report from consumer campaigner Fairer Finance has revealed.
Its analysis shows that 51% of households aged 60 and over in 2040 would benefit from accessing their housing wealth in retirement through later life lending, unlocking £23 billion each year.
This will not only support millions of consumers to live better lives in retirement but could also contribute £21 billion of gross value added to the economy in 2040.
The campaign group pointed to recent data from Scottish Widows which found that nearly two in five (38%) future retirees are on track for a retirement income below the Pension and Lifetime Savings Association’s minimum standard.
Across all households in the UK, housing wealth constituted 40% of total wealth in 2020-22, while pension wealth constituted 35%, suggesting a mismatch between people’s assets and retirement funding.
Fairer Finance said that drawing on property wealth could offer a route for homeowners who are asset rich but cash poor. Of those that do access housing wealth, the report estimates that the median total amount taken over their lifetime will be £140,000 in today’s prices.
It has urged the Government and regulators to take action to help support consumers in unlocking their housing wealth later in life.
These include facilitating a substantial increase in the supply of suitable and desirable retirement properties and a better framework for consumer protection; lowering the financial cost of downsizing by reducing stamp duty for people in later life; and normalising the use of housing wealth to maintain living standards, calling on MoneyHelper and Pension Wise to embed housing wealth as a central part of later life advice and guidance.
Fairer Finance also believes the Government and regulators should develop a personalised service for people, which brings their pension and housing wealth into a single view.
Lastly, it has called upon the Financial Conduct Authority to reform the regulation around later life advice, breaking down silos and ensuring all consumers are supported to maximise the use of all their assets as they approach retirement.
