Close to one in five of homeowners in their late fifties plan to use the equity in their main residence in later life because they have not saved enough money into their pension, according to research from LV.
Over the past 12 months, 114,000 of those aged 55 and over have taken out equity release, with a further 76,000 having freed up cash in their property by downsizing.
Of the 1,012 surveyed by LV who released equity from their home, 38 per cent said that cash will be used to supplement their retirement income and 4 per cent will use the money to cover their own care costs.
The research found that over 60s own a quarter of all UK property wealth in the UK, amounting to £993bn.
Almost 200,000 of those aged 55 and over have already released cash from their property or downsized in the past 12 months as part of their retirement funds. A total of 52 per cent of those in their 60s are considering accessing cash from their property to help fund their retirement.
The report also found that the average property owned by sixty-somethings is £272,000, £6,000 higher than the national average. Three quarters of people within this age group are mortgage free, whilst 8 per cent own a second home.
LV said it believes that the rise in people using their property to fund their retirement is likely to be driven by increasing house values over a long period, combined with low interest rates available on savings that have reduced retirement income.
Richard Rowney, managing director of life and pensions at LV, said: “Small pension pots, a lack of retirement savings, and the continuous rise in house prices are undoubtedly factors that have led to a rise in the number of people using their home to boost their retirement income.
“Indeed, if someone has lived in their property for a long time, the capital they can access from it will often outweigh the pensions savings they have.
“With people spending longer in retirement one of the challenges that many will need to overcome is how to fund it and how to meet the financial demands they may face in later life, including long-term care and the money tied up in their home may present them with a solution.
“There are numerous ways that retirees can access the capital tied up in their home, including deciding to downsize or take out equity release. For those considering unlocking the money in their home it is important to seek professional advice and explore all of the options available to them.”
