By 2035, the total property wealth of over-55s in England will double to almost £2.5trn, according to research by retirement income specialists Age Partnership.
The firm said the findings highlight a major long-term shift towards the importance of housing wealth in retirement financial planning.
According to Age Partnership, over-55s in England are currently sitting on £1.2trn worth of property wealth.
Over the next 20 years, this is forecast to more than double 105 per cent to £2.5trn, if property prices in the UK rise by a modest annual average of 2 per cent.
Age Partnership said that even if house prices remain completely flat, the housing wealth of over 55s is forecast to increase by 38 per cent to £1.7trn by 2035.
Additionally, with inflation currently hovering around zero, any increase in housing wealth currently means a real terms increase in spending power.
The research also showed that the 15.9m people in England currently aged 55 or older is expected to rise by over a third - 33.8 per cent to 21.3m as people increasingly live for longer, which compares to a much slower growth of 10.8 per cent for the population of England as a whole.
Age Partnership said that one of the main drivers for the growth in this age group is that the large post-war boomer generation that is currently at or nearing retirement age is expected to benefit from longer life expectancy. The firm added that this generation has also benefited from rising house prices.
Simon Chalk, equity release expert at Age Partnership said: “We are witnessing a radical long-term shift towards people reaching retirement age with a hugely significant nest egg in the form of property wealth. In twenty years’ time, people at or near retirement could be able to tap into a combined extra £1.3trn of property wealth to help fund their retirement.
“Many baby boomers currently reaching retirement age are fortunate enough to have amassed both property wealth and a sizeable pension. But for those whose pension savings aren’t sufficient to fund the retirement lifestyle they want, their housing wealth can be used to top up their pension income or help fund major purchases.
“As the number of people retiring with generous defined benefit pensions declines over the long-term, housing wealth could become even more important in retirement planning in twenty years’ time than it is today.
“Over 55s who want to tap into their housing wealth to fund their retirement lifestyle have two options. Downsizing to a smaller or cheaper property can free up their wealth. But many don’t want to move or can’t find suitable housing to downsize to. For people who can’t or won’t downsize, equity release can be a powerful tool to tap into a share of their property wealth – large or small.
“Equity release isn’t for everyone, but the explosion we are seeing in the housing wealth of the over 55s means that it will be an option that is available to more people than ever before.”
ruth.gillbe@ft.com
