Research from retirement specialist LV= reveals that a third of over-50s (31%, two million people) look set to use the equity in their home to help supplement their retirement income in the future, up from 1.5 million people in 2010 - dubbing them the HIPpies generation.
The 2011 LV= HIPpies report shows that 36% of over-50s still working say they will need to delay their retirement for financial reasons, and 16% say they would rather not think about their retirement finances at all.
The volatility in stock markets in recent months has had a considerable impact on investments and retirement savings. In fact the research shows that nearly half (45%) of those approaching retirement are considering alternative sources of income for their retirement in light of stock market falls. Only a fifth of over-50s (21%) believe that they are financially on track to retire as planned.
Over a third (35%) of home owners over 50 estimate that the value of their home has fallen in the last three years by an average of £24,651, totaling £56 billion. Despite this, an increasing number are planning use the equity in their home as part of funding their retirement - two million over-50s in 2011 (31%), compared to 1.5 million in 2010 (23%).
A further 13% said they will take advice on releasing the equity in their property as they approach retirement. When considering how they would access the equity locked up in their home, over half (52%) said they would downsize to a smaller home, while a fifth (20%) would move to a less expensive area. A fifth (19%) said they would use an equity release product.
The fall in property prices has caused many of 2011's HIPpies to consider alternative options. Over a quarter (26%) are trying to save extra money where they can to offset the drop in value of their home, although this figure was considerably higher at 35% in 2010. Many over-50s whose property has fallen in value are also looking at ways to maximise the amount of equity that could be released.
A quarter (25%) are planning to wait for their property to increase in value again before using its equity, and one in ten (11%) are focusing on making improvements to their home to help increase its value.
Despite the recent volatility, 54% of over-50s would still recommend that their children invest in property for their retirement. Just below this is recommending saving into a pension plan (53%), followed by cash savings (43%).
Vanessa Owen, LV= head of equity release commented: "The UK economy is still facing an uncertain future, with rising inflation, low interest rates and volatility in global stock markets, so it is understandable that those approaching retirement are feeling vulnerable.
“Combined with the fact that for many, their home is their biggest asset, releasing equity from a property is an option that an increasing number of over-50s are now considering.
"The equity locked in your home should be a prime consideration when looking at how to fund retirement. Planning ahead and discussing every available option is key to securing a comfortable retirement.
“The equity release market has changed radically in recent years, with new types of products entering the market offering greater flexibility and transparency. If you are considering using your property as part of your retirement funding then it is important to speak to a specialist financial adviser."
