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More retirement pots supplemented by property wealth

29 April 2018

Four in 10 over-55s worry about not having enough money in their pension pot to cover their retirement, according to new research from SunLife. As a result, many more people are considering equity release to give them the lifestyle they want in retirement.  

The study of more than 1,000 homeowners aged 55 and over found that one in five feels worse off than they expected to be, while 43% are concerned their money will run out before they die.

Two thirds blamed the rising cost of living for not being as well off as they had anticipated, and almost half believe poor interest rates have dented their savings.

In light of this, wealth from property is expected to become increasingly important for those who are in and approaching retirement, SunLife said, with someone in the UK releasing equity every 15 minutes. While the average pension pot of someone over 55 stands at £105,496, the amount of equity in their homes was more than double at £280,000. The average sum released is over £101,000 – almost identical to the average pension pot.

SunLife’s research showed that eight in 10 homeowners are ready to use their housing wealth to fund retirement options, with a third considering equity release to access some of the value tied up in their home.

Dean Lamble, chief executive of SunLife (pictured), said: “In some ways, there has never been a better time to retire – we’re living longer, enjoying healthier, more active lifestyles, and thanks to the new flexible rules around pensions, we have more freedom to spend our pension savings as we choose. But with the average pension pot of someone over 55 around £105,000, many don’t want to take out a lump sum and so reduce their pension income further.

“We know people over 55 want a cash fund for many reasons – whether to pay for home improvements, pay off a mortgage or just have more money to live on each month. Our research shows 90% of younger people don’t think their parents are ‘spending too much of their inheritance’ and that only one in five is relying on an inheritance. So, it’s perhaps not surprising that our research shows that less than half of people over 55 are planning on leaving their house as in inheritance. Instead they are realising the potential of an asset that’s risen in value markedly over the years by turning to equity release.”

 

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