Millions of older UK homeowners face a retirement income shortfall, despite holding significant wealth in their homes.
Retirement Compass modelling has found that 3.7 million homeowner households aged 55 to 79 are likely to have retirement income below the Pensions UK moderate living standard. This represents 46% of homeowner households in this age group.
Single women appear to be most exposed. The report found that 65% of single female homeowner households aged 55 to 79 are expected to fall below the moderate retirement income standard. This compares with 44% of single male homeowner households.
The research also highlighted a gap between housing wealth and retirement income. Single female homeowners aged 55 to 70 who are below the moderate standard hold an average of £225,000 in housing wealth. However, many are not using this asset to help close the income gap.
Awareness of equity release is relatively high, with 70% of older homeowners aware of the option. Yet only 13% have considered taking out a lifetime mortgage.
Instead, most homeowners said they would reduce their spending, downsize, or continue working to supplement their pension income. Just 14% said they would consider using property wealth.
The report also suggests attitudes towards borrowing in later life are changing. Among consumers aged 18 to 54, 67% agreed that it is becoming more common to take out a mortgage later in life, while 59% said it is becoming more acceptable. Both figures are up from 34% in 2021.
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