News
13% will use property to fund retirement
Almost 5m people plan to support their retirement by selling or renting out their family home.
According to research carried out by Barings Asset Management, 5% of owners plan to sell their home to keep themselves in retirement and 8% more say they will rent out their primary residence and live on the income.
That figure is up from 11% last year and the highest such figure since 2009.
The number of people saying they now plan to sell or downsize a property to fund all of their retirement has doubled since last year, rising from 2% to 4% (equivalent to 1.5 million people).
The number of people saying they are now planning to rent out property to fund all or some of their retirement was also 4%.
Marino Valensise, chief investment officer at Barings, said:
“Property can form part of a risk-adjusted, diversified investment portfolio but this year’s survey indicates that more people are investing in property as a retirement source and the concern is that this could mean they are over-concentrated in the asset class. It is worrying that the number of people relying exclusively on their property to fund retirement has increased. Property prices can be volatile so putting your faith in your home to fund retirement is risky.”
Looking regionally, 12% of those living in the South West say they plan to sell their primary residence to fund their retirement and 14% saying they plan to sell or rent other secondary properties. The least potentially exposed are those in Scotland and the West Midlands: 3% of people in each region say they plan to sell their primary residence to fund their retirement and 7% to sell or rent other properties.
Valensise added: “Young and old need to fully appreciate the level of risk involved in expecting to fund your retirement through the use of a volatile asset such as their own home, or from other properties such as buy-to-let. Investing for your retirement is about long-term planning and as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded. It is imperative that people diversify their investments through a range of assets which can, of course, include property.”
