Britons opting for bricks and mortar to fund retirement

"My property is my pension" - it's a common-place utterance from property-owning Britons when the subject of retirement crops up.

Suspicious of pensions and - for many - often less than cash-rich, the number of over-50s planning to use their property to boost their retirement income has doubled in the last year, claims a new survey. Why the surge? %VIRTUAL-SkimlinksPromo%

Safe as houses

There's a number of reasons. But first a few stats: investment company LV= says more than half of working homeowners over 50 - around 3.5 million Britons - plan to use equity in their home to fund retirement compared to a quarter in 2012. It claims 75% of home owning over-50s - around 5 million - now own their property outright.

"Those with a mortgage already," says LV=, "have £149,640 [on average] worth of equity built up in their home, for many unlocking the capital in their home would provide them with a significant income boost."

Leamington Spa financial adviser Rob Simpson told AOL Money he thought the rise was partly down to dismal annuity returns, which have steadily got worse since the financial crisis of 2007, as well as increasing restrictions on how pensions can be used and saved for, not to mention rock-bottom interest returns on savings.

Top performer

There's no getting away from the fact, Simpson says, that property has been one of the best-performing classes in the UK for almost two decades. "Let's say you have £100,000 to convert it into an income and you're 65. A £100,000 pension pot would supply you around £3,500 a year of income."

He goes on: "But if you go and buy a flat near, for example, Birmingham University, it will yield you £6,000 a year, plus you've increasing rental future income. It's becoming [property investment] more socially acceptable within the family."

You also get to hang onto the asset, perhaps passing it on ultimately, unlike a pension.

The financial havoc that has impacted many Britons during the downturn appears considerable: in the workplace just one in four is currently on track to retire as planned compared to when they initially thought about retirement says LV=.

Charges upon charges

Ongoing unease about pensions is considerable, despite recent noise about capping charges. Earlier this year pension consultants Hymans Robertson estimated the UK's £275 billion pensions industry had scammed pension savers of up to £27bn in excessive fees and surcharges over 40 years.

Meanwhile just one in seven, says LV=, will still retire at the time they originally planned - but on a lower income. "A quarter (26%) are having to delay their retirement for financial reasons and a further 13% have adopted the ostrich position and are not thinking about their retirement finances."
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