Homeowners relying on property to fund retirement

Thursday, 2 April 2009 12:36 PM

A report out today has found 26 per cent of 55 to 64-year-olds surveyed are relying on their property to help fund retirement.

uSwitch.com says their report leaves anyone relying on their property in a vulnerable position, with the overall slump in property prices hitting the next generation of retirees hard.

The report has also found 1.7 million of current pensioners are relying on property to fund their old age. uSwitch claims just over one in ten 55 to 64-year-olds think they cannot afford to retire, with 18 per cent of over 65s who are still working saying they cannot afford to retire either.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Falling house prices coupled with the stock market crash and low savings rates have combined to take the wind out of the sails of many of those approaching retirement.

"Despite the 0.9 per cent property price increase reported today, this is a drop in the ocean compared to the overall 15.7 per cent decrease in prices over the last 12 months.

"There isn't an instant solution, but that doesn't mean people should just bury their heads in the sand. They should still be planning and making sure that they are on the best financial footing possible."

The research also suggested more than half of UK consumers are unprepared for retirement, with 17 per cent of 45 to 54-year-olds and 14 per cent of 55 to 64-year-olds having not started saving for their retirement yet.

Some 20 per cent of 55 to 64-year-olds think that they won't be in a position to retire until they are at least 66 years old, with six per cent predicting it won't happen until they reach at least 69 years old.

The average working person is now expected to live for almost 22 years past retirement, and by 2050 the average life expectancy will have shot up to 95 years - an increase of more than five per cent from today.

However, the UK state pension is set to increase on April 6th, by £7.25 for couples and £4.55 for single pensioners.

But Andrea Rozario, director general of Safe Home Income Plans (SHIP), says pensioners may still face financial hardship: "While these increases to the basic state pension are certainly welcome, UK pensioners are still struggling.

"Even with the recent changes, the state pension is just £413 per month for single retirees and £659 per month for retired couples. The average 70 year old equity release customer could typically raise £61,500 from their £205,000 property - a sum that could substantially improve many retirees standard of living.

"As the UK population ages and pension provision appears to stall, the UK is facing a very real retirement funding crisis."

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