CONSUMERS CONSIDERING USING PROPERTY AS PART OF THEIR RETIREMENT
26 May 2012
Two-thirds (73%) of people would consider using housing equity as part of their later life finances, reveals The Equity Release Council (The Council). Indeed by 2017, more than a quarter of a million (257,168) retirees will consider downsizing and 59,347 will look into equity release.
Research undertaken among almost 2,000 UK consumers of all age groups highlights the fact that while some of today’s pensioners might be able to rely on income from pensions, investments and benefits, going forward more and more retirees realise the critical role their property will play in retirement.
The research – undertaken to coincide with the launch of The Council (formerly SHIP) – reveals that while expected reliance on property decreases with age as people build up other assets, over half (55%) of today’s 55-64s still believe it will play some part in their retirement finances.
Property as Part of Retirement Finances:
|Percentage who intend to consider using property as part of their retirement finances||73%||93%||82%||69%||63%||55%|
|% who listed property as a top 3 source of income||61%||73%||70%||65%||60%||47%|
|% who would condsider downsizing||45%||51%||61%||48%||49%||39%|
|% who would consider equity release||7%||11%||5%||9%||7%||9%|
The most common way that people would consider accessing the value in their homes would be via downsizing (45%) followed by renting out a room (10%) and then equity release (7%). In practical terms, this means that in 2017 over 59,000 retirees will be looking at what role equity release can plan in their retirement financing [see table below for protections].
Those who have a second property such as a buy-to-let investment or holiday home might consider renting out the property for income (17%) or selling the property (7%) if they needed to improve their retirement finances.
Top Income Sources:
When asked to list what they thought would be the top sources of income in retirement, an employer pension (44%), private pension (39%) and savings/investments (36%) came out on top. However – overall – 61% said property would be one of the top sources of finance in retirement.
When these figures are considered against population projections, it suggests that by 2017 more than a quarter of a million (257,168) people will consider downsizing and 59,347 will look into equity release. This is a conservative estimate as 27% of people between the ages of 18 and 65 say they feel benefits will be one of their top three sources of income in retirement – something that is unlikely with the current Government stance.
|Retirement year for typical person (aged 65)||2056||2047||2037||2027||2017|
|No. of people who will retire that year||861,000||762,000||792,000||755,000||666,000|
|% who will consider downsizing||51%||61%||48%||49%||39%|
|No. who will consider downsizing (projected population figures)||442,800||465,513||381,547||372,220||257,168|
|% who will consider using equity release||11%||5%||9%||7%||9%|
|No. who will consider using equiry release ( projected population figures)||98,400||41,564||69,372||52,797||59,347|
Nigel Waterson, Chairman of The Equity Release Council, said:
“This research clearly shows that more and more people are considering using their property as part of their retirement finances. This might mean choosing to downsize, rent a room out or use equity release – or any combination of the above.
“With such a heavy potential reliance on the equity tied up in UK residential property, it is vital that consumers receive accurate information and access to specialist advice and products which have excellent safeguards. Therefore we are delighted to launch The Equity Release Council which for the first time will look to bring together all aspects of this industry to promote the highest standards of consumer protection and education.”
1,775 UK consumers were interviewed between 01 and 15 May by Wriglesworth Research. While the end to the Default Retirement Age and expected increases in the Government Pension age were taken into account, when these were balanced against ill-health retirement claims and other causes of early retirement, it was decided to set the potential age at which people retire at 65. These statistics were then compared to the Office of National Statistics Population Projections to determine UK population as well as expected number of over-65s.