Retirement: Most over 45’s expect to retire with assets of £500,000

A new survey has shown the majority of over 45s expect to have accumulated assets worth £490,990 when they retire.

The survey by Partnership, a provider of Enhanced Annuities, of 2,000 people aged between 45 and 65, found a wide gap between the assets people expect to have built up by retirement and the likely reality.

Property to fund retirement?

The results of the survey show that 89% of people believe property will make up less than 50% of their assets when they come to retire. The balance will therefore be made up through other investments such as Individual Savings Accounts (ISAs) and pensions.

However, many experts believe this is unrealistic, with the average pension fund in the UK worth around £32,000.

The results of the survey suggest the next couple of generations to retire, could be significantly underestimating the likely proportion of their assets which their property will make up when they retire, or indeed overestimating the value of other assets such as pensions and ISAs.

The survey revealed interesting attitudes towards property:

• 28% of people said their home was not an asset they planned to use in retirement, for example by downsizing or releasing equity
• 26% see their home as an asset they could leave to their children
• However, 24% of people said they would use the equity in their home to help meet the costs of retirement if they had to
• Whilst 9% were actively planning to use their home to help fund retirement and 8% said they would use it to help pay for the cost of care in old age

Commenting on the survey Ged Hosty, Managing Director of Equity Release at Partnership said: “While people over the age of 45 have arguably benefitted from unprecedented house price inflation, many people simply don’t realise this and are wildly optimistic about their retirement provision. This research also suggests that most people between the ages of 45 and 65 have not given serious thought as to what their net worth is, something that should definitely be done in the run up to retirement.” (Source: Partnership)

The comments from Mr Hosty are echoed by research from Prudential which found that 41% of people have never discussed how their will turn their pensions into an income when they retire and 1 in 7 don’t know what their main source of income in retirement will be.