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New report says this is the most important contributing factor to financial wellbeing in later life

2-minute read

Mollie Millman

27 June 2019

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Investing in property is a key part of retirement planning for at least half of homeowners aged 45 and over, new research reveals.

The report from the Equity Release Council found that those aged between 45 and 64 are rethinking how they view property as part of their financial planning.

How important is property to financial wellbeing?

People in this age group are increasingly relying on property to help set them up for a comfortable retirement, with 68 per cent seeing it as the most important contributing factor to their financial wellbeing in later life.

On top of this, the report found that 56 per cent feel that they can benefit from their property's financial value while they still live there.

This way of thinking isn't limited to buy-to-let landlords – the self-employed and people who struggle with building an adequate pension pot are also taking this approach.

Using property to help with retirement

45 to 64 year olds are also less likely than their older counterparts to see property as something to leave behind as an inheritance.

Instead, more than half (55 per cent) see it as something that helps with their financial plans.

At the same time, 49 per cent also said they see property as helping to meet unexpected expenses, while 25 per cent said they'd use it to help out their family.

Property as part of household wealth

The report by the Equity Release Council also found that three quarters of the average home is currently owned outright, as borrowers increase the capital repayments to ensure that they pay off their mortgage.

Older age brackets are not only the biggest owners of property, they also depend the most on its contribution to their overall finances, according to the report.

It found that bricks and mortar accounts for 40p in every £1 of household wealth for those aged at least 65, rising to 47p among those aged above 75. This compares to just 35p across the population.

Investing in buy-to-let

With such high investments in property, buy-to-let is proving to be a favoured asset class among those looking to fund their retirement.

Which? cites research from mortgage broker Commercial Trust Limited, who found that nearly 40 per cent of all buy-to-let purchase and remortgaging activity is done by over 55s. What’s more, 65 to 75 year olds are applying for more buy-to-let mortgages, with a five per cent increase in applications in 2018.

David Burrows, chairman of the Equity Release Council, said: “The ageing population and changing retirement landscape means people are increasingly thinking of property as a multi-purpose financial asset – particularly those aged 45 to 64, the retirees of tomorrow.

“Property is often a person’s single largest asset and makes a significant contribution to homeowners’ personal finances as well as providing a place to live.

“Changing attitudes to property are significant given the financial challenges facing our ageing population as they seek to live longer, healthier lives.

“Many people have made inadequate provision for their retirement and care needs, while others have younger family to support. Consequently, bricks and mortar have become a vital piece of the retirement funding jigsaw, to benefit people during their lifetime as well as their families.”

What do you think about this new report? Let us know in the comments below.

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