Whilst agreeing in principle with the sentiments of the report, which suggests that putting all your finances into one property pot isn't good advice, Prudential believes that many in retirement will need to draw upon the equity their homes have generated to supplement their pensions.
Anthony Frost, spokesperson for Prudential's Equity Release plans, said: "Putting all your eggs in one basket is not shrewd financial planning. We at the Prudential believe that retirement income will be made up of a combination of elements including both pensions and property. Our research shows Mr or Mrs Average has a £70,000 shortfall in between what they would like to retire on and the reality. The message is simple, if you want the lifestyle you dream of in your retirement your pension will need supplementing."
However Pru argues that relying on downsizing for extra income could leave you high and dry. A report out last week, commissioned by Prudential, suggests over 4 million(1) baby boomers are planning to downsize when they retire to access the equity. This report suggests it could unleash housing havoc.
Prudential's survey concludes:
An attempt to move home (by baby boomers) in order to release capital would be self-defeating
David Parry, the report's author highlights: "The more people tried to do this, the more the difference between the selling price of the family home and the buying price of the retirement property would be reduced, forcing retiring couples to 'downsize' further and further. This would take them further and further away from their ideal retirement, to homes that were smaller, in worse condition or in worse locations than they either desired or may be suitable for people in retirement".
