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Homeowners could nearly double their retirement savings by combining pensions and property wealth
For older homeowners, property wealth could help to boost the amount of money available to fund their retirement.
9 Dec 2024
- Homeowners in England and Wales could release an average of £69,600 worth of equity release from their homes using equity release– a 20% increase on five years ago
- This could compliment the average pension pot (£72,000) and add five extra years’ worth of retirement income
- The areas that have seen the greatest increase in property wealth include Blaenau Gwent and Merthyr Tydfil in Wales, Broxtowe in the East Midlands and Salford in the North West
New analysis of Office for National Statistics (ONS) data by Legal & General Retail1 has found that homeowners could nearly double the amount of money they have on hand for retirement by using their property wealth.
Housing wealth continues to rise
In the last five years, house prices in England and Wales have increased by 20%, to an average of £290,000.
The most significant growth has been in the East Midlands and Wales, where house prices have increased by an average of 26% and 25% respectively, adding more than £40,000 to the overall value of the average property.
Property could add five years’ worth of retirement income
For older homeowners, property wealth could help to boost the amount of money available to fund their retirement. The average pension pot at the point of retirement for Legal & General drawdown customers is £72,0002 but if they were to access their property wealth using equity release, for instance, they would receive an average of £69,600 (24%). This would create an overall retirement fund of £141,600.
This could improve the prospects of many pensioners by adding an equivalent of five additional years’ worth of retirement income3.
The regional picture
While homeowners in London and the South East continue to have some of the highest value properties in the country, house price growth has plateaued in these areas in recent years. Meanwhile, homeowners in other areas of the country have seen significant increases in the value of their properties.
Areas like Blaenau Gwent (+49%), Merthyr Tydfil (+46%), Broxtowe (+39%) and Salford (+38%) are some of the most increased in terms of overall property values [top 20 listed below].
Lorna Shah, Managing Director, Retail Retirement: "Our collaboration with the Happiness Research Institute aims to give us a greater understanding of what people truly need to be happy in retirement, so that they can maintain and even improve their wellbeing as they get older. While strong social connections and good health play a vital role in a rewarding retirement, the study shows having a predictable income is key to unlocking the other elements of life that make us happy.“Young adults today need more support to help them save and secure a more rewarding retirement in the future; a key step in achieving that is an increase in workplace pension contributions. We should also consider the role that other assets, such as property, might play in helping people supplement their pension pots.”
Top 20 local authorities with the biggest increase in house price values over the last five years
References
1Legal & General analysis of Office for National Statistics, Median house prices for administrative geographies, September 2024.
2Legal & General, workplace pension data.
3Based on PLSA’s Retirement Living Standards’ minimum income for a single person £14,400 per year.
Further information
Notes to editors
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at HY24) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 11 December 2024, Legal & General has a market capitalisation of 13.7 billion.
Legal & General Retail helps create brighter financial futures for all our customers. The division covers the savings, protection and retirement needs of our c.14 million retail policyholders and workplace members.
In 2023, we had total individual annuity sales of £1,431 million, and issued £299 million of Lifetime Mortgages and Retirement Interest Only Mortgages. Our Workplace pension platform served 5.2 million members, while our Protection businesses gave peace of mind to several million direct, group and US customers, taking in £1,991 million of UK and $1,584 million of US gross written premiums.