You might see your home as your pension, and it is true that your equity can be used to help you fund your later years, but you can never bank on your property alone – you need to speak to a financial adviser about your future plans sooner rather than later.

People pinning their retirement dreams on downsizing their property or using their existing equity will be in for a shock. They might find that they do not have as much equity as they think and they will certainly underestimate how much you need to comfortably see yourself through your retirement.

According to Standard Life, a combination of a fall in house prices and annuity rates has dealt a double blow to many, with the average pension pot from downsizing only providing £43.50 a week income. It says banking on downsizing your home or using a secured loan to generate sufficient income is a potential retirement disaster unless you have also made provision elsewhere.

Andrew Tully, senior pensions policy manager at Standard Life says: “Our recent research shows many people are still pinning their hopes on using property to generate their retirement income, favouring this asset class over savings accounts and pensions.

“However, our analysis shows many people need a reality check to get their long-term financial planning back on track. The old adage of not putting all your eggs in one basket has never been more appropriate.”

Talk to a financial adviser about your long-term plans. They will show you that while your home is an important asset, you need to do more – that means increasing savings, making sure to do all you can to reduce debt and thinking about pension provisions. Home equity will play a crucial role in many Brits’ retirement plans, but people have to have more provisions set aside.

SOURCE: Standard Life, 07/04/10

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