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Older homeowners face £17,984 retirement income shortfall

Older homeowners are anticipating they’ll need an annual retirement income of £35,196, more than double today’s average of £17,212, a report by the Equity Release Council and Key has found.

The challenges of rising living costs (30%), prioritising mortgage repayments over pension savings (24%) supporting financial dependents (22%) and earning less money so unable to afford to save more (24%) are all cited as reasons why homeowners over-55 are unable to increase their pensions savings.

David Burrowes, chairman of the Equity Release Council, said: “With the UK’s population ageing rapidly, the scale of this issue is only set to become greater.

“An increasing number of consumers must make their pensions savings last over longer retirements with property wealth fast emerging as a viable solution to help meet this funding challenge.

“Our report emphasises the pension pressures faced by many across the UK and calls for property wealth to be better considered and integrated into the advice process.

“A single-product solution to retirement planning is no longer fit for purpose. We must break down the silos that create tunnel vision when it comes to later life financial planning.”

Yorkshire and the Humber is home to the greatest reality gap, with older homeowners in this region likely to see a shortfall of £27,723 between what they anticipate needing and the retirement income they’re likely to achieve.

Just over one in three (31%) homeowners who have increased their pension savings in the last year have been able to do so as they’re no longer paying off their mortgage.

Among those who still have a mortgage, almost half (44%) report that paying off their mortgage has, or is likely to, limit their pension savings potential.