Worrying number of people relying exclusively on property to fund retirement

The number of people planning to sell or rent property to fund retirement has reached an all time high and a warning about funding retirement in this way has been issued.

A senior member of asset management company Barings Asset Management said relying on property as the only option to fund retirement will leave older people open to the volatility of the property market.

Rod Aldridge, head of UK wholesale distribution at Barings, wants people to understand the risks which can surround the use of property to fund retirement and to diversify investments through a range of assets not just restricted to property.

Barings’ annual survey revealed around seven per cent of non-retired people are planning on selling their primary property to fund their retirement. The number of people planning on selling property which isn’t their main residence has also risen from 13 percent in 2013 to 16 per cent in 2014.

Mr Aldridge said: “Property can, of course, form part of a diversified investment portfolio but this year’s research indicates that more people are investing in property as a retirement source and this could mean they are too concentrated in the asset class. Property prices can be volatile so relying on your home to provide all your income to fund retirement is risky.”

“The level of risk involved in expecting to fund your retirement through the use of a volatile asset such as their own home or from other properties such as buy-to-let should be fully appreciated and understood. Investing for your retirement is about long-term planning and as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded.”

The number of those planning on selling or downsizing their property to fund all of their retirement has risen from two per cent to four per cent in the last two years.

Mr Aldridge said: “It is worrying that the number of people relying exclusively on their property to fund retirement has increased again.”

The research did however find the number of people who have ‘never planned’ on using property to fund retirement rose significantly from 35 per cent to 52 per cent over the last year. Barings’ annual surveys have been carried out since 2009.