Concerns about property pensions diving in value and leaving older homeowners unable to finance their retirement are misplaced, according to new research.
Three-quarters of homeowners regard equity release or downsizing as a measure of last resort only to be considered if they are in dire financial straits, says pension provider Aegon.
A survey of thousands of over 55s also revealed a minority of only 4% saw their homes as their main source of income once they had retired.
Just over half of all homeowners wanted to hang on to their homes as a gift for their families when they die.
That’s just as well as a fifth of relatives are relying on an inheritance to fund their retirement.
Retirement myth
Another myth of retirement was also put to rest by the survey.
Selling a home to move in with friends or relatives is regarded as taboo by most people – only 3% confessed they would consider the move to help make ends meet.
Even the spectre of moving in to a retirement home was more popular, although only 5% of people entertained the idea.
“Our research shows that people view the value in their home and the funding of their retirement separately. It’s encouraging that people are not setting out to rely on equity in their home as a silver bullet to solve a lack of pension saving,” said the firm’s director of pensions, Steven Cameron.
“With the right planning and saving behaviours it can probably be avoided. However, those who don’t plan ahead and realise too late that their house is by far their most valuable asset, may be forced into making some difficult decisions.”
Cash poor
Cameron explained that failing to save enough money to fund retirement would leave many retirees cash poor and with only their home as an asset of any real worth.
“These people will have to scratch around for their least bad financial options. Although seven out of 10 people would consider downsizing, most would have to move into much smaller accommodation to make savings that would be anywhere near the amount of money they would need,” he said.
Renting out a room was rated as on a par with moving in friends to save money – with only 3% admitting they would consider the possibility.
