Lowest income pensioners have highest homeownership levels

According to figures from ONS, during 2016/17 the home ownership level among retired households with the lowest disposable incomes (the 1st decile with average income of £7,619 a year) was 89%. This is equivalent to nearly 660,000 households, 40,000 higher than three years earlier.

That level of home ownership is far higher than the 66% for those in the lower middle income band (5th decile with average annual income of £17,493) and is almost as high as the richest tenth (10th decile, income £55,365 a year) where 94% own their own home.

The figures should make working people think about saving more into pensions as the most reliable way of providing an income stream. Meanwhile, those in retirement who are struggling on low incomes, a high proportion of them likely to be homeowners, should check that they are claiming their State full benefits and consider ways to access capital tied up in the property.

Property is considered a good investment for retirement. Government figures for 2016/172 show that half (49%) of those who are not retired think saving in property will make the most of their money, a rise from 40% five years ago and far higher than the 28% who favoured workplace/personal pensions. Nearly a quarter (23%) said they plan to sell their home and downsize in retirement.

Stephen Lowe, group communications director at Just Group, said: “Property is often claimed to be the best way to save for retirement but looking at the figures it is striking that among the retired, higher home ownership levels doesn’t equate to higher income.

In fact, we see that both the poorest and the richest pensioners are among the most likely to own their homes, with those who live on average incomes less likely to do so. It is worth pointing out that it is how much you accumulate in State, employer and private pensions that appear to make most difference to how much income you have in retirement.

That’s a strong argument in favour of ratcheting up pension auto-enrolment minimum contributions and encouraging the self-employed to pay into pensions too. It is also noticeable too that the pensioners with the lowest incomes also receive the lowest benefits. It’s important they make sure they are claiming their full entitlement and not be put off making inquiries just because they may own a property.

Overall, the message is that building up a pension is one of the best tools for delivering retirement income but those with property do have choices. Either way, people need to ensure they take guidance and advice to use their assets wisely.”