Homeowners relying on property for retirement income, claims Aviva

Long-term growth in UK house prices and homeowners’ lasting attachment to their homes mean people are turning their attention towards property wealth to help manage their finances and boost retirement income, according to the latest Aviva Real Retirement Report.

It found that 46% see property wealth as a key part of retirement income planning, with 69% owning a home worth more than their pensions, savings and investments.

However, 23% of mortgaged over-45s are worried about paying off their loans, with 1.02 million UK households owing £85,634 each, on average.

Having lived in their current homes for 21 years, on average, 80% of over-45 homeowners want to remain in their properties for as long as they physically can. Around 16%, or 2.12 million households, expect to need to borrow money during retirement, with more than half set to rely on this to stay in their homes.

Approximately 56% expect housing wealth will be needed to pay for care in later life, while 61% see it as a key part of their inheritance planning.

Clive Bolton, managing director, retirement solutions, Aviva UK Life, said: “Pension freedoms have resulted in new decisions for people to make about how they use their life savings, and these findings suggest we are also starting to see a shift in attitudes towards wider use of property to help fund retirement, as well as providing a place to live. Property assets more than match pension wealth for many older homeowners, so it is sensible to consider bricks and mortar among the options to supplement their savings.

“However, later life brings a host of financial challenges and pressure points, which suggest it would be wise not to place all retirement bets on the house. The equity build up in people’s homes sounds like a lot, but considering that many can be retired for 20 years or more and often want to help their families as well as themselves, it’s easy to overestimate how far that money will take them. People need to consider if there is enough house to go around and build this into their retirement plans alongside their other assets.”