The Tax Incentivised Savings Association (Tisa) has published a report setting out the extent of under-saving for retirement in the UK and the role housing wealth might play in boosting retirement incomes.
The report, called Can housing wealth save the day?, surveyed more than 1,000 UK homeowners aged 50 and over to determine what part housing or property will play in their savings portfolio, and how they might use the equity in their home to boost their retirement income.
Those surveyed had optimistic goals about their lives post-retirement with 70 per cent wanting to travel, 30 per cent seeking to help their children financially and 22 per cent planning to pay off their mortgage.
The respondents’ expectation of required retirement income was typically two thirds of salary but three quarters had either not done any planning for retirement or had left the issue dormant for several years.
Despite this the survey said 50 per cent were confident they would have sufficient income in retirement and 70 per cent were expecting their non-pension savings to provide at least a fifth of their income, which is at odds with ONS data that has indicated average households have limited non-pension savings.
For those who did expect an income shortfall in retirement, this was an average of £11,400 a year.
Gower Wisdom, product director at Old Mutual Wealth and co-author of the report, said: “We have long known that under-saving for retirement needs to be addressed and there is an increasing urgency to provide the necessary financial planning support to consumers, so that they can be financially secure in retirement.
"We call for government and industry to work together to address this issue now to ensure appropriate support can be made available to consumers, as demand grows amongst the increasing number of people entering retirement needing to access the wealth locked in their house. This need becomes more pressing as we seek to respond to the challenges of increasing longevity and later life care.”
As part of the report, Tisa has developed four recommendations for helping consumers plan for and fund retirement: enhance consumer awareness; provide "holistic" financial guidance; provide "holistic" financial advice and making access to wealth in the home mainstream in making access to financial advice products easier to access.
Nigel Waterson, chairman of the Equity Release Council, said: “At a time when the UK faces the challenge of an ageing population, many industry regulators are starting to address the issue of retirement funding and lending into retirement.
"Equity release is a fundamental part of the solutions needed and is increasingly recognised as such, illustrated by record breaking lending so far in 2016, and by the continued innovation and falling interest rates in the sector."
Martin Evans, director of Newport-based Prism Independent Financial Advisers, said: "Although equity release is an option for us [as IFAs] we personally always try to recommend it as the last port of call and always encourage clients to deplete their savings before they make the decision to go down this particular route."