Three quarters of homeowners would only use their home as their ‘pension’ as a last resort

2nd August 2016

The vast majority (74%) of homeowners would only use their home as a last resort to provide a retirement income or don’t consider their home as a source of retirement income at all. Only 4% of homeowners consider their home as their main source of retirement income, research from pension firm Aegon suggests.

The research was conducted with 560 adults.

Steven Cameron, pensions director at Aegon UK says:  “Our research shows that people view the value in their home and the funding of their retirement very separately. It is encouraging that people are not setting out to rely on equity in their home as a silver bullet to solve a lack of pension saving. And with the right planning and saving behaviours it can probably be avoided. However, those who don’t plan ahead and realise too late that their house is by far their most valuable asset, may be forced into making some very difficult decisions.”

The research also highlights that while more than half of people (53%) want to leave their home to their loved ones, actually moving in to live with family in retirement is extremely unattractive to most people.

“Those homeowners who don’t make adequate pension provision may find their home may be their only asset of value meaning they may be forced into choosing the ‘least worst option’ for using it to fund retirement. Our research found that few of the possibilities scored well. When pushed, 69% said they’d look to buy something smaller although it would require substantial downsizing to release enough to generate any significant income for life.

“There was almost no appetite for moving in with family (3%) or renting out a room (3%). And moving into a retirement home (5%) was only marginally less unpopular.”

Aegon’s research also highlighted an inheritance culture with 21% of homeowners hoping to use inheritance to boost their retirement.

Cameron added: “Intergenerational transfers are alive and well among today’s retirement savers with more than half (53%) of people still aspiring to pass their home onto the next generation. But equally, more than 20% are hoping inheritance from elderly relatives will boost their own retirement income. This suggests that even post retirement, some individuals continue to rely on the bank of mum or dad, which is  a risky strategy as increasingly, inheritances are being eaten up to fund long-term care.”

*Research was conducted by Aegon with the Aegon UK consumer panel. Total sample size was 560 adults. Fieldwork was undertaken in June 2016. All figures based on the findings of this research unless otherwise stated.

 

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