Majority of HNW individuals planning to use property wealth to fund retirement

The plans of over 1,000 people in the UK with investable assets of over £250,000 have been surveyed by wealth management firm, Saltus, which found that an overwhelming majority are opting to tap into their property wealth to help fund their retirement.

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Property Reporter
13th October 2022
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According to the findings, 84% of respondents said they would be using housing wealth to fund at least part of their retirement, with 70% planning to fund at least 25% of the cost.

Younger people are more likely to rely on housing wealth to fund retirement

The research revealed that younger people are the most likely to be relying on property to fund their later years, with just 7% of 25-34s saying they don't plan to use any housing wealth to fund their retirement.

When asked what proportion of their retirement they plan to fund with housing wealth, 40% said up to 50% while 30% said at least 75% - on average, respondents in this demographic plan to fund around 49% of their retirement using housing wealth.

The wealthiest respondents are most likely to rely on housing wealth entirely

On average, just 2% of HNWIs said they plan for 100% of their retirement to be funded by housing wealth, but this doubles 4% for 25-34-year-olds and more than triples for the wealthiest respondents. Of those with assets of £3m or more, 7% say their housing wealth will be the only source of funding for their retirement; on average, those with £3m+ plan to fund most (54%) of their retirement using housing wealth.

Interestingly, despite over 65s being the least likely to intend to use housing wealth to fund their retirement (19%), of those that do, 33% plan for it to cover 100% of the costs.

Respondents from Northern Ireland least likely to rely on housing wealth

The regions where respondents plan to use their housing wealth to fund at least half of their retirement costs are the East of England (53%), the North East (54%), the East Midlands (50%) and the South West. Respondents from Northern Ireland plan to use housing wealth to fund just 39% of their retirement on average, with 29% saying they won’t rely on it all.

Michael Stimpson, Partner at Saltus, said: “The second Saltus Wealth Index Report shows that the majority of people intend to fund their retirement through some degree of housing wealth. While the temptation to fill gaps in pension pots this way is understandable, it is a fundamentally risky strategy. It depends on residential property continuing to retain its value or even rising in value, which is far from a certainty.

“There really is no substitute for careful financial planning. The best retirement plans are ones where people have been clear about their aspirations and have worked towards their goals in a careful and methodical way in the context of other demands on their spending and saving. It may not be an easy win, but it is the best way to retire in comfort and with peace of mind after a lifetime of hard work.”

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