New data collected by Canada Life Home Finance indicates that the younger generation anticipate using equity from their home to provide for their retirement.
The Canada Life Home Finance report states that in the UK, young people share a more holistic view to the wealth home ownership can create.
Of the 16 to 54 year olds surveyed, 9 per cent expect the equity accrued in their homes will provide the bulk of their retirement income.
Under 55’s three times more likely to rely on home equity
They are three times more likely than those aged 55 and over, to look to their home as a way of financing their retirement years. This mind set emphasises the potential for equity release which is moving into mainstream financial planning.
Half of under 55s believe that their state or workplace pension will provide them with sufficient funds on retiring, while 21% trust that their savings will cover their income needs.
Alice Watson, head of marketing and communications at Canada Life Home Finance said: “It is good that the younger generation recognises that they can unlock wealth from their property in retirement. This openness is likely driven by the reality that many under 50s will receive less generous pensions under the defined contribution scheme, compared to the majority of the older generation on the defined benefit plan.”
21 per cent surveyed planning on savings to fund retirement
However, the 21 per cent of those banking on their savings may be proved wrong. HMRC’s record tax receipts in April 2019, show a considerable rise in the number of people drawing down on their pensions after the freedom reforms in 2015.
There is a tendency for people to underestimate their life expectancy and not have enough savings to cover their retirement years.
Alice Watson added: “Following the pension freedoms, there is a growing fear that people’s retirement income might not be able to provide them with the sort of lifestyle they’re hoping for.”