Number of Britons set to use home as pension doubles

27th September 2013

The amount of working Britons planning to use their property as their source of income in retirement has doubled in the past year.

According to research from retirement specialist LV= the so-called HIPpies or ‘home is pension’ generation has soared over the past 12 months where today more than half, at 52%, or 3.5m working homeowners over 50 plan to use the equity in their home to fund their retirement.

This compares to just 28% in 2012.

LV=’s 2013 HIPpies report reveals that the value of the average worker over 50 has a property worth £258,000, more than £15,000 higher than the national average of £242,000.

Three-quarters of home-owning over-50s, accounting for some 5m own their property outright. And those still mortgaged already have £149,640 worth of equity built up in their home.

The increase in people using their properties to fund their retirement is likely to have been driven by increasing house values over a long period, and low interest rates on savings.

As well as building up equity in their homes, over-50s have spent an average of £30,000 each creating their perfect home, in the two decades they have lived in their property.

Having made such an investment two in five, at 38%, over-50s say that they want to stay in their current home for the rest of their lives, and this figure rises to one in two, at 47%, of all retirees.

But of the 9.6m British homeowners aged over 50, 88% feel a strong connection to where they live and consider themselves a part of the fabric of the community in which they live and would miss their friends if they were to move.

Reasons why over-50s are set to unlock the cash tied up in their property

Supplement retirement income 53%
To fund my own care costs 17%
To help my children/ grandchildren financially e.g. pay for wedding/ school fees 13%
To make improvements to my home 10%
To make a luxury purchase e.g. buy a sports car 8%

Vanessa Owen, head of annuities and equity release says: “Property is often the largest asset someone has when they reach retirement, especially if they have lived there for quite a while, and will often significantly outweigh any pensions savings they have.

“There are numerous ways that retirees can access the capital tied up in their home including deciding to downsize or take out an equity release plan.

For those considering unlocking the money in their homes it’s important to seek professional advice and explore all of the options available in order to find the best solution for them.”

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