Andrew Tullley of Standard Life warns Advisers should make their Clients aware that they should not rely solely on a retirement income from downsizing their homes as UK property values do not support this. 

In a recent survey conducted by Standard Life 45% of the people they spoke with viewed their main residence as their main source of income when they retire.  Property being one of the favoured ways to invest in the UK, looking at property values across the UK it is apparent that peoples homes will not generate a large enough income to enjoy a reasonable standard of living.  This is where the Financial Advisors role is crucial to increase the possibility of enjoying the life style they have planned for. 

Many Financial Advisors will have already had conversations with their Clients regarding what they expect with regard to the standard of living once they retire.  Clients who believe they do not need ISA’s or pensions as a platform for retirement need to realistically look at if their home will provide enough income. 

A good way of starting to answer these questions would be to use a simple calculation resulting in a rough guide to what you can expect as an income.  Compare the income generated by downsizing to a smaller property once retirement is reached against the two thirds of income prior to retiring. 

With life expectancy increasing and people living approximately 30 years and possibly more into retirement age its worth bearing in mind just what equity the sale of your property would generate to provide one’s chosen lifestyle.  With the average UK detached property values at £290,208 as at July 2010, compare this to the average UK bungalow at £192,373 the capital gain for retirement would be approximately £98,000 certainly food for thought. 

Interestingly a survey by Scottish Widows carried out in 2009 illustrated only 38% of women over 50 reported they had enough savings to use for retirement.  These figures reflect a drop of 15% compared with 2009  Although pension savings have been hard hit by the recession and many people choosing to lower their monthly payments, the over 50’s have been hardest hit according to the survey, this is true for both men and women  saving less for their pensions than last year. 

Ian Naismith of Scottish Widows, Head of Pensions say’s, “It’s a worrying sign that the group most vulnerable when it comes to saving is women over 50.  While women’s career patterns often make it hard to save consistently for retirement, this is the time when they should be saving the most”. 

He recommends we save 12% of your income to ensure a comfortable retirement.  When most of us are being deterred form saving due to the recession, Naismith claims this should be the trigger for everyone to save more.  A bold statement to make perhaps when 25% of individuals surveyed currently with a pension, not yet retired want to save more yet 29% claim they cannot save more than they already are