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Home is where the plans are

22 December 2011

More than one in three see their house as part of their retirement income, new research from more 2 life shows.

Research from more 2 life, an equity release provider specialising in enhanced plans, shows that 34 per cent of those aged over 45 see the equity in their home as part of their retirement income. This figure rises to 48 per cent for those aged between 45 and 54; an increase perhaps representing the fact that retirement is closer for this age bracket.

"Sitting on wealth"
As a nation, we're all living longer and enjoying lengthy retirements - which can mean finding extra money to fund our later years. Jon King, Managing Director at more 2 life, comments: "Retirement savers are literally sitting on wealth…and that could be used to help supplement retirement income. It makes sense to include property equity in retirement planning.
High equity; low savings
Relying on your home forming part of your retirement plan seems to make perfect sense when you consider that, typically, over-55s have more than eight times as much equity in their home than in their pension pot. New figures from Aviva show that while the average pension pot for over-55s stands at £26,940, the average equity in their home is much higher at £223,112. Putting some of this equity to good use must be very tempting at a time when inflation remains sky-high and low interest rates are impacting on any savings that over-55s have managed to build up.

Late to plan
Using the cash locked up in your bricks and mortar may also help people who start to think about retirement late in their working life. Figures from Aviva reveal that over a third of over-55s have yet to make any financial plans for their retirement, and those that do make plans, on average, only begin thinking about retirement at 48.

Equity release
There are two main ways to make the equity in your house work hard in your retirement, without making monthly repayments. You may choose to downsize; however a stagnant property market and high costs of moving may mean you don't end up with as much cash as you imagined. Plus, the upheaval of moving to a new property, possibly far away from friends and family, puts many people off downsizing.

Another option is equity release, which allows you to remain in your home whilst unlocking some of the equity within it. There's typically no monthly repayments and the money released is tax-free. Perhaps best of all, you can spend the money released in any way you wish; so it could help provide a little extra each month for a comfortable retirement.

To find out how equity release could help your retirement plans, contact Key's UK-based team on 0800 531 6027. We're here Monday - Friday, 9am - 5.30pm. We're the UK's No 1 independent specialist and our award winning advice will give you the whole picture on equity release, including which plan is right for you, how your entitlement to state benefits may be affected and how all plans will reduce the value of your estate.

If you are considering equity release, you should read through is it right for you carefully.

Page last updated: Wednesday 14 August 2019