More than a third of us regard out homes as our ticket to financial security in retirement, says research.
Lack of knowledge is firing people up to bet on property to boost their retirement savings when other investments could offer a better return.
A recent survey by financial think-tank The Wisdom Council asked more than 2,000 people where the money they are relying on for retirement will come from and 39% responded equity in their main home.
Home equity was the most popular response alongside cash.
But regulator the Financial Conduct Authority reckons only 3% of people opt for equity release.
Equity release dilemma
Downsizing is another way to access home equity but the dilemma is more than one generation have their eyes on freeing up the same cash to fund their retirements.
Children are hoping their parents will downsize to help them climb on the property ladder, but the parents want to downsize to release cash to help them pay for a comfortable retirement.
“Property might seem like a safe bet, but this attitude in the final stages of the property journey poses a severe risk to anyone relying on downsizing, regardless of their age,” says Dawn Hyams, head of investor insight at The Wisdom Council.
“When push comes to shove, very few people are willing to give up the family home. Aside from the emotional attachment, they want their children and grandchildren to be able to stay, and see property as a future store of wealth.
“The only reason they can imagine giving it up is for health reasons, by which point it may be too late to enjoy any of the financial benefits.”
Risk and return
Property may seem a safe bet, Hyams explains, but people believe fear losing their money which stops them making good financial decisions.
“This reliance on property, and indeed cash, supports our belief that risk aversion is alive and kicking, with the value of taking higher risks for higher returns poorly understood among savers,” she says.
“For most, the fear of losing money outweighs the knowledge they should be taking more risk. They do not trust themselves to make decisions, and they do not believe asset managers or pension providers will deliver on their word – in fact, one in five said they had previously experienced losing money in high-risk investments.”