Homeowners are leaning more heavily on their properties to fund retirement, fresh data reveals.
The trend is most pronounced in London, where 56 per cent of homeowners say they expect to rely on their property to support them in later life, according to research from Annuity Ready.
Experts warn Britain faces a looming retirement shortfall, with 15 million people not saving enough for later life.
Those set to retire in 2050 are projected to receive around £800 less in private pension income than today’s pensioners, while current retirees often have property wealth to fall back on.
Sarah Lloyd, commercial director at Annuity Ready explained that many people are banking on their homes to support them financially in retirement whether that’s through downsizing, equity release or letting out a spare room.
Jazz Gandhi, 46, bought a flat in West London in 2008 and remains "quietly confident" about its value as she prepares for later life.
She told The i Paper: "Many employees move between jobs and pay into a pension scheme, so managing that pot becomes complex," adding she will not invest in a pension aside from paying National Insurance contributions to claim the state pension later in life.
She added: "I've also chosen to be single and child-free so my property assets should be enough to help fund a comfortable retirement. But I'll probably end up working to cover bills anyway."
Her approach reflects a growing reliance on property wealth among London homeowners.
Some 56 per cent of London property owners plan to use their homes for retirement income
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Fresh data from Annuity Ready shows 56 per cent of London property owners plan to use their homes for retirement income, compared to a national figure of 28 per cent.
The capital’s residents are therefore twice as likely as the rest of Britain to depend on property to finance their retirement. Earlier generations benefited from securing homes at far lower prices than today’s market demands.
Many Londoners now own properties worth several hundred thousand pounds more than their original purchase price.
These homeowners face options of selling for a lump sum or generating rental income to supplement pensions.
Renata, 57, from East London, has similar plans.
Many Londoners now own homes valued hundreds of thousands of pounds above their original purchase price
| PAShe said: "Buying in London is much harder now; people are paying a lot more for a lot less. So, using property for pension income might not be as accessible for future generations."
Ms Lloyd agreed that property wealth is becoming a less reliable option.
She said: "This is all the more reason why we're urging people across the UK to take stock of their finances early and get clear on their options."
Scottish Widows’ retirement expert Robert Cochran has urged people to take simple steps now to secure a more comfortable future.
He said the first priority is to "sit down and plan," stressing that only 39 per cent of people are currently on track for an adequate retirement lifestyle, while "a quarter aren’t sure how pensions work."
Mr Cochran explained that understanding pensions is essential, as they are “long-term investments that help you save for your retirement in a tax-efficient way.”
He highlighted the importance of auto-enrolment, warning against opting out.
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There is increasing reliance on housing wealth
| PA"From the age of 22, you are automatically enrolled into your workplace’s pension scheme and we recommend not opting out," he said.
He added that lowering the auto-enrolment age to 18 and removing the lower earnings limit could boost young people’s future pension pots by £46,000.
Mr Cochran also urged savers to monitor their pensions closely, with one in five considering consolidation but unsure how to proceed. Tools such as the Ready-Made Pension and #PensionMirror can simplify the process.
Finally, he emphasised the benefits of salary exchange, often misunderstood because of its name.
"Despite the name, salary sacrifice doesn’t reduce your take-home pay,” Mr Cochran said. "In fact, it can boost your pension savings significantly – opting for salary sacrifice could increase your pension savings by £463 a year."