22% of people planning ahead for their retirement expect to use the value of their home, according to research by Legal & General Home Finance (LGHF).
12 Jan 2022
The findings indicate that a third of all people who aren’t currently retired (35%) own a property but have less than £10,000 saved in their pension pot. A further 22% of people hold no pensions savings at all. The significant number of small or empty pots, coupled with the 24% increase in median house price values in England and Wales since 20162, could be driving more people to consider using their property wealth to fund their retirement. Based on current house prices in England and Wales, the average homeowner could access over £72,988 in equity release, for instance3. People who aren’t currently retired expect to downsize their property (10%), sell their property (9%) or access equity via a lifetime mortgage (6%) to help fund their later life.
While many people looking ahead to retirement are hoping to access property wealth there are a significant number of retired homeowners who could also benefit from considering the role their property might play in funding their lifestyle. Nearly two-thirds of people over 65 (70%) are dependent on the state pension as their main source of income and are also homeowners.
Claire Singleton, CEO, Legal & General Home Finance: “The significant increase in house prices in recent years has likely shifted many people’s expectations of the role property wealth will eventually play in supporting their retirement. We anticipate that using your home to fund your retirement will become more commonplace in the future, whether that’s by downsizing to free up funds or releasing money tied up in your home through products like lifetime mortgages. It's never too early to start thinking about how you plan to fund retirement, and to seek the appropriate advice to get your affairs in order, and for many homeowners their property could be the key to getting the lifestyle they desire.
“Our findings also show there are a large number of people currently in retirement who may be on a limited income and could benefit from the likely increases in the value of their home. It’s important we challenge the discomfort some people still have with using cash from their home to help them achieve better financial outcomes in retirement.”
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Retail Retirement’s mission is to help its customers lead longer, healthier, happier lives. We believe everyone should be able to have a ‘more colourful retirement’. The Division comprises the Group’s retirement savings and income, later life lending and care solutions businesses. In 2020, LGRR wrote £910 million of annuity premiums and issued £791 million of lifetime and retirement interest only mortgages.
*at 31 Jun 2021