The UK’s younger generations are three times more likely than their elders to rely on their property wealth to fund retirement, research by Canada Life has indicated.
The insurer’s research suggested some one in 10 (9%) of 16 to 54 year-olds expect the wealth stored in their homes to be their main source of income in retirement.
That is triple the proportion of those aged 55 and above, suggesting those who are yet to reach their final years of working recognise the role property is likely to play in financially supporting their future.
Canada Life Home Finance head of marketing and communications Alice Watson said: “This openness is likely driven by the reality that many under-50s will receive less generous pensions under their defined contribution scheme, compared with the majority of the older generation on defined benefit plans.
“Notably, the research also illustrates the evolving profile of retirement income, and lends further weight to the argument that equity release is moving into mainstream financial planning.”
The research also suggested around half of under-55s were of the belief their state or workplace pension would provide them with sufficient money in retirement, while just one-in-five (21%) reckoned their personal savings would cover their income needs.
In April, however, HMRC revealed record tax receipts that indicated many people had been accessing their pensions in earnest following the pension freedoms reform in 2015.
‘More hope than expectation’
As such, said Watson, the 21% appear to be living “more in hope than expectation”, with research finding a significant number underestimate their life expectancy – and consequently risk a lack of sufficient funds for their retirement.
Watson added: “There are a range of equity release products that can help customers enjoy their later life, from helping clear existing debts to funding lifestyle enhancements.
“That is why we have organised a series of workshops designed to help advisers either become equity released qualified, or to make the most of their existing qualifications.”
This is reproduced from Professional Adviser; all views are from the publication. This originally appeared online on 05 June 2019.