High Net Worth Individuals (HNWIs) are relying heavily on their housing wealth as a retirement fund, according to the second Saltus Wealth Index Report.
The wealth management firm surveyed attitudes of over 1,000 people in the UK with investable assets of over £250,000 and 84% of respondents said they would be using housing wealth to fund at least part of their retirement.
In fact, 70% of respondents planned to fund at least 25% of their retirement cost in this way.
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.”
The research revealed that, on average, just one in 50 (2%) HNWIs said they plan for 100% of their retirement to be funded by housing wealth, but this doubles to one in 25 (4%) for 25–34-year-olds and more than triples for the wealthiest respondents.
Of those with assets of £3million or more, one in 14 (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, a third (33%) plan for it to cover 100% of the costs.
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 form 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.
Stimpson added: “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.”
