Older homeowners face a shortfall of £17,984 a year in retirement
There is a gap between the retirement income people expect they will need and what they’re likely to get.
And it’s a cool £18K a year, according to the Equity Release Council and adviser Key.
They found older homeowners anticipate needing an annual retirement income of on average £35,196, which is more than double today’s average of £17,212.
Yorkshire and the Humber is home to the greatest reality gap, with older homeowners in the region likely to see a shortfall of £27,723 between what they anticipate needing and the retirement income they’re likely to achieve.
It’s followed by London (£19,856) and the South West (£19,531).
The research also found that the challenges of rising living costs (30%), prioritising mortgage repayments over pension savings (24%), supporting financial dependents (22%), and earning less money (24%) are all reasons why homeowners over-55 are unable to increase their pensions savings.
Not only are these factors impacting on pension contributions, but they are prompting the early erosion of savings pots, said the Equity Release Council, as one in six (16%) homeowners aged 55+ who are yet to retire have, or plan to, dip into their pension savings early.
Property wealth holds untapped potential to help close the retirement income gap, said the trade association. The average homeowner in England and Wales could access £88,290 from their property via a typical equity release plan – equivalent to over a decade of state pension payments.
Yet despite this, just one in five (19%) older homeowners who have sought information, guidance or advice on later life finances were prompted to consider accessing property wealth as an option – highlighting a disconnect between the choices they are presented with and the wealth or assets at their disposal.
David Burrowes, chairman of the Equity Release Council, said: “Our report emphasises the pension pressures faced by many across the UK and calls for property wealth to be better considered and integrated into the advice process. A single-product solution to retirement planning is no longer fit for purpose. We must break down the silos that create tunnel vision when it comes to later life financial planning.”