Property or Pension ?

Falling property prices mean people may not get as much cash for retirement as they think and should consider making other provisions.

Research by Friends Provident found a third of consumers were depending on property or equity release for their retirement income. However, if property prices fall to the same extent seen in the last house price crash in the early 1990s, the average homeowner could see themselves out of pocket by £89,850 based on the Council of Mortgage Lenders’ average mortgage figures.

If house prices continue to fall, people could find themselves in serious financial difficulty with negative equity on their property and no personal pension. This is a dangerous situation to be in if people don’t have any savings or a pension to purchase an annuity for their ‘winter’ years.

Further research suggest 65% of UK consumers have yet to start saving for their retirement.
Research shows a potential crisis for some people in the future. People have depended on the property market in the past to fund their retirement, but with the uncertainty over the past few months and the current credit crisis they should not put all their eggs in one basket.