Millions of UK homeowners are heading for a retirement income shortfall, despite sitting on substantial housing wealth, according to a report from Fairer Finance.
The Retirement Compass report commissioned by the Equity Release Council found that single women are hardest hit. More than six in 10 (65%) single female homeowners aged 55-79 will have a retirement income below the Pensions UK moderate living standard (£31,700 per year for singles) yet hold on average £225,000 in untapped housing wealth.
This compares to four in 10 (44%) of single male households, also with average housing wealth of £225,000.
In total, 3.7 million homeowner households aged 55-79 will have retirement income below Pensions UK moderate standard, equating to 46% of homeowner households in this age bracket.
The findings follow the Pension Commission’s recent interim report, which estimated that 15 million people are currently under saving for retirement.
The research also found that 52% of women aged 18-54 feel insecure about their family’s economic security in retirement, compared to 47% of men. Among older homeowners aged 55-79, the gap is even greater, with 32% of women feeling financially insecure in retirement versus 20% of men.
Even homeowners with substantial property wealth are not immune. Two fifths (41%) of single female homeowners with £400,000 or more in housing wealth still fall below the Pensions UK moderate retirement living standard – as do 21% of couples with equivalent property wealth.
Tim Hogg, director of Fairer Finance, said: “It’s important to help people save more into their pensions, but if we focus on pensions alone then we overlook a major asset that millions of households already hold.
“Our research shows that huge numbers of people heading for a retirement income shortfall are sitting on significant housing wealth which could bridge the gap, if they want it to. The picture is particularly stark for single women, who face the highest risk of low living standards in retirement, despite often owning homes worth hundreds of thousands of pounds.”
The consumer group said 70% of homeowners aged 55-79 were aware of equity release, yet only 13% had previously ever considered a lifetime mortgage.
When it comes to supplementing their pension income in future, 58% of homeowners aged 55-79 said they would reduce spending or adjust their lifestyle, while 38% would downsize to a cheaper home and 28% would continue/return to work. In comparison, just 14% would explore utilising their property wealth.
Fairer Finance said its research suggests the key barrier is not awareness but engagement and understanding.
However, the prospect of a mortgage in later life is becoming more socially acceptable, particularly among younger generations, the research found. Five in 10 (59%) consumers aged 18-54 agreed that it is becoming more acceptable to have a mortgage in later life. This is a sharp increase on 2021 and 2023, when 34% and 39% of UK adults agreed that it was becoming more acceptable to have a mortgage in later life.
Similarly, over six in 10 (67%) consumers aged 18-54 agreed that it is becoming more common to have a mortgage in later life. This is another sharp increase on 2021 and 2023, when 34% and 39% of UK adults said the same.
Hogg added: “Silos in regulated advice markets mean many people are not presented with all their options for borrowing in later life, and many don’t see downsizing as a viable option because there is a lack of desirable retirement housing.
“Tackling these barriers will help millions of people improve their living standards in later life. We need policymakers, regulators, and firms to work together to overcome the barriers that are preventing people from seeing their pension and their property as part of the same financial picture.”
Commenting on the report, Sadna Zaman, home finance proposition manager at Canada Life, said: “The report shows that for many approaching or in retirement, particularly single women, housing wealth is not being translated into financial security in later life.
“For advisers, this creates a clear opportunity to help clients understand how equity release and other forms of later life lending can turn property wealth into flexible, accessible funds, whilst still protecting long-term security and their wishes for passing wealth on. Bringing property wealth into the conversation will be especially important for women and single-person households who, according to the research findings, face the greatest risk of a retirement income shortfall.
“Regulatory reform, product innovation and enhanced adviser education will be vital to remove barriers in the advice landscape and support advisers to take a more holistic view of a client’s assets in retirement.”
Jamie Jenkins, director of policy at Royal London, added: “This latest research is a timely reminder that a good retirement can extend beyond pension income alone, highlighting the significant, and often overlooked, role housing wealth can play in supporting financial resilience.
“With millions of homeowners holding substantial property value, there is a real opportunity to broaden how retirement planning is approached, especially for groups like single women who are most at risk of income shortfalls. The priority is ensuring people have access to clear, joined-up advice so they can consider their pension and property wealth together and make more informed decisions about their financial futures.”
Main image: bruno-martins-DrhYt-kAe9s-unsplash
