Around 1.3m over-50s are planning to downsize their property to help fund their retirement, even though most believe an average of £27,250 has been wiped off the value of their homes in the last two years - Alison Steed
AROUND 1.3m over-50s are planning to downsize their property to help fund their retirement, even though most believe an average of £27,250 has been wiped off the value of their homes in the last two years.
However, the research from LV= shows that recent house price gains of 0.4 per cent in October – the sixth month in a row prices have risen – has improved the hope for retirement plans.
Over 50s home owners estimate that they have lost around £80 billion in property values thanks to the recent falls. But despite this, just 2 per cent of the over-50s surveyed said they had been put off using their home for a pension.
Vanessa Owen, LV= Head of Equity Release, said:"In the decade leading up to the credit crunch, more and more homeowners saw their property as a potential cash cow to aid retirement. But in a matter of months millions of pre-retirees have seen both their property and pension fund values battered. Despite this, their confidence in the long-term value of bricks and mortar remains. House prices still have some way to go before full recovery but with increases for six consecutive months now, they are feeling more confident that their home can still play a big part in helping to finance their retirement."
The love affair us Brits have with property has prompted one in eight over-50s to consciously save less into traditional pensions, but a similar number have said they were not able to buy their own home and save into a pension, as property prices were so high they could not afford to do both.
Ms Owen said:"The recession has had a big impact on the personal wealth and pension pots of the over-50s, but for many their home is still a big part of their retirement income plans. Trading down to a smaller house, or using a suitable equity release product to get funds out of your existing home, can therefore play a big part in helping to make people's retirement years more comfortable."
Alison Steed is editor and co-founder of MyMoneyDiva.