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Catch up with the latest press releases from LV=

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Over half of all over 50s to use their property to fund their retirement

Press release: 27/09/2013

  • The number of working over-50s planning to use their property as their pension has doubled in the last year - half (52%) now set to use cash in property to fund retirement
  • 75% of over-50s own their property outright
  • Average homeowner over-65 has lived in their property for 25 years

The HIPpies ‘home is pension’ generation has doubled in the last year, according to retirement specialist LV=, as more than half (52%) of working homeowners over 50 (3.5 million people[1]) plan to use the equity in their home to fund their retirement – compared to a quarter (28%) in 2012.

LV=’s 2013 HIPpies report reveals that the value of the average working over 50s’ property comes in at £258,000 – more than £15,000 higher than the national average of £242,000. As three-quarters of home-owning (5 million) over-50s own their property outright and those with a mortgage already have £149,640 worth of equity built up in their home, for many unlocking the capital in their home would provide them with a significant income boost. The increase in people using their properties to fund their retirement is likely to have been driven by increasing house values over a long period, and low interest rates on savings.

As well as building up equity in their homes, over-50s have spent an average of £30,000[3] each creating their perfect home, in the two decades they have lived in their property. Having made such an investment two in five (38%) over-50s say that they want to stay in their current home for the rest of their lives, and this figure rises to one in two (47%) of all retirees. Indeed it’s not just their home that they love, of the 9.6 million British homeowners aged over 50[4],88% feel a strong connection to where they live and consider themselves a part of the fabric of the community in which they live and would miss their friends if they were to move (39%).

Vanessa Owen, Head of Annuities and Equity Release said: “The number of over 50s who plan to use their home as their pension has risen steadily since we first launched our report in 2010 and it is clear that for a large section of the population their home is will play a key role in funding their retirement. Property is often the largest asset someone has when they reach retirement, especially if they have lived there for quite a while, and will often significantly outweigh any pensions savings they have. As our report shows, having invested a considerable amount of time and money in their property, many would prefer to stay where they are and access the cash tied up in their home without having to move.”

Reasons why over-50s are set to unlock the cash tied up in their property

Supplement retirement income

53%

To fund my own care costs

17%

To help my children/grandchildren financially e.g. pay for wedding/school fees

13%

To make improvements to my home

10%

To make a luxury purchase e.g. buy a sports car

8%

The report shows that the economic situation has also impacted on the retirement plan of many over-50s in the workplace, with just one in four (26%) on track to retire as they planned when they initially thought about their retirement. One in seven (13%) will still retire at the time they originally planned, but on a lower income, a quarter (26%) are having to delay their retirement for financial reasons and a further 13% have adopted the ostrich position and are not thinking about their retirement finances.

As safe as houses

Despite the economic uncertainty it is clear that many consider a bricks and mortar investment to be as safe as houses. 84% of over-50s say their property has either maintained or increased in value in the last three years and only one in ten (10%) respondents say that they are currently worried that property prices will drop.

It is clear that property is viewed as an effective way of planning for retirement as more than half of over 50s (52%) would recommend that their children invest in property to fund their retirement. Pensions were the only saving vehicle that proved more popular, with 53% saying that they would recommend their children prepare for retirement by investing in a pension.

Vanessa Owen concluded: “With people spending longer in retirement one of the challenges that many need to overcome is how to fund it and how to meet the financial demands they may face in later life, such as the cost of long term care.

“There are numerous ways that retirees can access the capital tied up in their home including deciding to downsize or take out an equity release plan. For those considering unlocking the money in their homes it’s important to seek professional advice and explore all of the options available in order to find the best solution for them.”

Notes to editors

Research conducted by Opinium on behalf of LV= in September 2013. 1,014 homeowners aged 50 – 64 (in employment and 65+ (retired) polled.

  • According to the Sept 2012 ONS Labour Force Survey there are 8,437,258 over 50s currently in full or part-time employment. 80% of these own their own home, giving a base of 6,749,806. 52% over 50s are still working and own their own home – 52% of 6,749,806 is 3,509,899.
  • The 8% who own a property other than their main residence believe it to be worth £200,000 on average. Of this, they estimate on average that they have £158,000 of equity in in the property
  • On average over 50s homeowners have spent £20,654 on the interiors of their homes since they have lived there and £10,827 on the exteriors.
  • According to the ONS 2011 Census and the 2011 Scottish Household Survey there are approximately 9,618,851 house owners (house either owned outright or on a mortgage) in Great Britain over the age of 50.
  • On average 78% of over 50s homeowners have spent 4.4 years getting the interior and exterior of their homes the way they would like it to be.