Are you relying on your property for your retirement?
Industry officials are forever warning us of the importance of thinking about the future in terms of our retirement and ensuring that we have something in place that will enable us to live comfortably once we have retired.
Retirement is a time where we can finally enjoy our lives without the worry of work in order to bring money in, but without a reasonable pension pot in place many people will find it extremely difficult to cope financially once they have retired.
However, despite these warnings from various industry groups and professionals it appears that millions of Brits have their own ideas about how they will cope once retirement age comes around.
A recent study has shown that millions of people in the UK are now relying on their property in order to fund their retirement, and industry experts have stated that this could be a real gamble that doesn’t pay off, leaving the homeowner in a very tricky situation.
Despite the fact that the property market has gone through extreme turbulence over the past couple of years, and that property values have dropped a huge amount since the housing market peaked in 2007, millions of homeowners across the UK still insist on relying solely on their properties for their retirement years.
This means that they have no other pension plan in place, and if it all goes wrong they could be left with pretty much nothing. Worryingly the study showed that around 36 percent of working adults had no works or private pension plan in place.
One industry official that was involved in the research, Ian Bird, stated: ‘With lower house prices, people who rely on the equity in their property may find themselves having to massively downgrade in order to have sufficient funds to support their retirement.’ Another industry expert added: ‘Relying on property to fund a pension, can and has worked in the past but it is a very high risk strategy. At the very least you should save in some sort of pension plan too.’
One fund manager stated: ‘The problem is that using a property as a means to fund retirement leaves you relying on the health of the property market, which can be very cyclical. Also if something goes wrong with the property, both home and retirement income are affected. Faced with a depressed property value an individual either has to carry on working, or accept a much reduced income in retirement.’
Mr Bird also went on to say: ‘The lack of awareness and insight amongst consumers when it comes to pensions is a cause for extreme concern. Believing that you will work to a certain age is all very well, but it isn’t always realistic. Many people find themselves unable to work in later years, usually for health-related reasons. Thinking that you can ’save later’ is not always an option.’
In addition to the data on using properties for pensions the research also revealed that close to 30 percent of people aged between twenty five and forty four had nothing in place for their retirement, and 11 percent of these had never even considered how they would cope once they had retired.
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