According to analysis by Canada Life, the UK’s younger generation is three times more likely than the older generation to use their property wealth to fund retirement.
Based on research by Canada Life, 9% of 16-54 year olds expect the wealth stored in their homes to be their main source of income in retirement, which is triple the number of those aged 55 and over (3%). These figures suggest that the younger generation recognise the role that property wealth will play in financially supporting their later lives and they are generally more comfortable viewing their wealth holistically.
Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said:
“It is good that the younger generation recognises that they can unlock wealth from their property in retirement. This openness is likely driven by the reality that many under 50s will receive less generous pensions under the defined contribution scheme, compared to the majority of the older generation on the defined benefit plan.
“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 finds that half of under-55s expect that either their state or workplace pension will provide them with sufficient money in retirement (50%), while over 1 in 5 believe that their savings will cover their income needs (21%). But other data suggests that these sources of income may not materialise as expected.
In April, HMRC revealed record tax receipts that indicate many people are accessing their pensions in earnest following the pension freedoms reform in 20151. And the 21% who think they will have enough savings may be more in hope than expectation, with research finding that a significant number of people underestimate their life expectancy2. Consequently, some people may not have sufficient funds for their retirement.
Alice Watson continues:
“Following the pension freedoms, there is a growing fear that people’s retirement income might not be able to provide them with the sort of lifestyle they’re hoping for. However, there is a range of equity release products that can help customers enjoy their later life, from helping clear existing debts to funding lifestyle enhancements.
“And with more consumers open to using their property wealth in the future, it’s crucial that there is also a growth in advisers. That is why we have organised a series of workshops designed to help advisers either become equity release qualified, or to make the most of their existing qualifications.”