The number of people using property wealth to help pay for their retirement is set to increase dramatically, research by Old Mutual Wealth has discovered. 

Equity release, downsizing and buy-to-let are all set to become more common as gold-plated final salary schemes fade away, research from YouGov on behalf of investment and pension provider Old Mutual Wealth has found.

The study of those aged 50-75 shows that among those already in retirement, just 2% have downsized or plan to downsize to help fund their retirement.

However, among those who have not yet taken retirement, 15% say they plan to downsize their house to help pay for retirement.

The number of people that have used or plan to use equity release also increases from 1% to 3% between those in retirement and those approaching retirement.

Buy to let is also set to become more popular as a source of income in retirement. Among those approaching retirement, 11% say they plan to use buy-to-let to help provide for their retirement income. Only 6% of today’s retirees use buy-to-let.

Today’s retirees have relied more heavily on earnings-related workplace pensions. Exactly half of those already retired say they benefit from a salary-based company pension for retirement income. This compares to just one-third (33%) that will be able to use a salary-based company pension scheme to provide retirement income in future.

Old Mutual Wealth retirement planning expert Adrian Walker says:

“For many people their home is the place where they brought up their children and a particular building, street or neighbourhood can have a strong emotional attachment. Giving that up can be a struggle and people have historically preferred to hold on to the family home into their retirement and pass it on to their children.

“Our evidence suggests attitudes are changing, however. More people understand that they may need to use value tied up in property in order to help fund retirement, but it is important to understand the financial implications of relying on property wealth in retirement and be aware of all the options available.

“For instance, while property prices have gone up reasonably consistently in the last twenty years, relying too heavily on house-price appreciation could leave savers disappointed if growth slows in the long-term. When planning ahead for retirement, think about having a mixture of different assets to rely on, perhaps including Isas, pensions and property.

“Selling the family home is also not the only option for those that wish to realise value from property. Recent statistics show the equity release market is growing already as it allows individuals to avoid the hassle and upheaval of moving out of their home, while still unlocking some of the value.

“There are also other considerations, which need to be thought through carefully. When the home-owner eventually dies and wishes to leave the property to family, it is important to remember it will be included within their estate and may be subject to inheritance tax at 40%. In contrast, assets held in a pension will be free of tax if the individual dies before age 75. Those planning ahead may wish to balance their assets in retirement to ensure they pass on wealth to their family efficiently.

“The key to security in retirement is to speak to a financial adviser in order to understand how best to balance all available sources of income to meet your personal circumstances.”

*Research conducted by YouGov on behalf of Old Mutual Wealth. Surveyed 1536 UK adults aged 50-75. 

For more information contact

Michael GlenisterOld Mutual Wealth020 7778 963807469

Notes to Editors:

Old Mutual Wealth

Old Mutual Wealth is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

It has an adviser and customer offering spanning:

  • Financial advice delivered by the Intrinsic network in the UK and AAM Advisory in Singapore
  • Platform based wealth management and protection products delivered by Old Mutual Wealth in the UK and Old Mutual International globally
  • Asset management solutions delivered by Old Mutual Global Investors
  • Discretionary investment management delivered by Quilter Cheviot.

Old Mutual Wealth oversees £127.3 billion in customer investments (as at 30 June 2017).

Old Mutual Wealth is part of Old Mutual plc, a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 (as at 31 December 2016) million customers across the world and has a total of £212.3 billion of assets under management (as at 30 June 2017).

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