Close to four million people plan to use their home to fund their retirement, as they seek to reap the benefits from the soaring property prices of the past 20 years.
A study by customer-owned financial services company One Family found 19 per cent of those aged 50 plus plan to use some of their property wealth towards their retirement, as they downsize, make buy-to-let investments and unlock the capital in their homes through lifetime mortgages.
This equates to 3.9 million people, with an estimated £37bn due to be accessed from lifetime mortgages, according to One Family's data.
The firm spoke to more than 1,013 people aged 50-plus in December 2017.
The provider found one in three of those aged 50-plus fear their pension will not be enough for them to live on, with a quarter of those planning to dip into their property wealth considering this to be a more reliable investment than pensions.
One Family Property stated the trend is being driven as a result of soaring property prices over the last 20 years, as well as decreasing pension pots and longer retirements.
Nici Audhlam-Gardiner, managing director at One Family Lifetime Mortgages, said: "It is clear from the research that homeowners are seeing their property as a cash cow to fund their retirement, and with the dramatic house price rises we have seen, investing in property seems like a wise option.
"We would urge homeowners approaching retirement to consider all the options open to them, and speak to a financial adviser, as how you fund retirement is one of the most important financial decisions you will ever make."
According to Office for National Statistics (ONS) figures those aged 50-plus own an estimated £2.3trn of the nation's total £4trn property wealth, with house prices rocketing 300 per cent in the last 25 years.
While currently one in seven (15 per cent) retirees use property to contribute towards their income, this is set to increase to one in five (22 per cent) over the next decade, One Family's Ms Audhlam-Gardiner said.
The most common ways people will use property to fund their retirement, alongside equity release, include a buy-to-let investment, which will account for a third of the retirement income for those planning to do it.
An additional 1.8 million properties will be sold as over 50s downsize, accounting for 28 per cent of their retirement income.
Meanwhile, the research showed a mere 37 per cent of over 50s plan to consult professional financial advice.
But of those that had used financial advice, the vast majority (84 per cent) felt it was useful or essential to their financial planning, particularly when it came to considering different products, such as lifetime mortgages or enhanced annuities, which they otherwise would not have considered.
David Hollingworth, associate director of communications at L&C Mortgages, said: "Bricks and mortar has long played a part in the investment mix and many buy-to-let landlords are sure to see their property holding as a contributor to their retirement funds.
"That might come through the rental income itself or through capital growth over time, which can then be released through sale of the property."
He said many homeowners will have seen substantial growth in the value of their home in the past decades but warned there is no guarantee that prices will continue to increase as they have in recent years.
He said: "Of course, those planning for retirement should look to diversify their investments and not put all their eggs in one basket."
carmen.reichman@ft.com
