More Brits considering equity release as they approach retirement

A new study by Prudential has found that a significant number of those approaching retirement age are considering using their homes as part of their pensions. According to Prudential, 17 per cent of people in the UK over the age of 45 say they plan to use some or all of the equity on their properties to boost their incomes after they have given up work. The figures clearly show the extent to which Britons are under prepared for retirement as they demonstrate that many have no savings or pension schemes to fall back on when they leave full time employment.

Prudential also found that different generations have differing opinions on the role of their homes in retirement. People who have not yet retired are more likely to view their house as part of their pension than those who already have, it was discovered. Specifically, 21 per cent of people aged between 45 and 54 said they are considering equity release - which allows retired homeowners to unlock some of the money tied up in their home without having to move - compared with just 13 per cent of those over 65.

Ironically, the people who stand to benefit most are the very people who are likely to extract equity from their homes during retirement. While they will presumably receive a sizeable inheritance from their parents - who will still own their properties when they die - their own children will be left with relatively little. According to Gary Shaughnessy, managing director of Prudential retail life and pensions, the survey therefore marks a major shift in the way in which people are thinking about retirement and how they’re planning for it.

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