Housing wealth could help support retirement

A report published by the Pensions Policy Institute commissioned by Prudential UK and Europe considers the role that housing wealth could play in supporting retirement for today's pensioners and for future generations of pensioners.

The report shows that housing wealth could play a greater role in supporting retirement in the future, but not everyone has housing wealth and those who do have housing wealth do not always view it as a way to save for retirement.

For most people, housing wealth will be a complement to saving in a private or occupational pension, not a substitute.

Niki Cleal, PPI Director, said: "The main way that home ownership supports retirement for many people is to reduce living costs in retirement. Owning your own home in retirement can reduce living costs relative to paying rent (not having any housing wealth) by around 30% for a single person and by around 40% for a married couple."

"This research shows that if current demographic and homeownership trends continue, the number of households where the head is aged over State Pension Age with higher value housing wealth which could be used to release equity to support retirement - whether by downsizing or using commercial equity release products - could increase by a third, to 5.2 million households by 2030."

"There may still be a number of barriers to the use of housing wealth to support retirement: many people are emotionally attached to the family home or may wish to leave the home as a bequest. Pensioners may also be concerned about the costs and risks of releasing housing equity."

Keith Haggart, Prudential's Director of Lifetime Mortgages, added: "The first PPI report in this series highlights the fact that, during retirement, income needs change. At retirement people spend more money on leisure and require a higher level of income. This need for income falls as travel costs reduce and then rise again in later retirement as health costs increase."

"However, for most people their income is fixed or rises only in line with inflation. This report shows that the real benefit of equity release is it allows customers to supplement their retirement income to match their individual needs."