Almost half of homeowner households aged 55 to 79 are expected to fall short of a moderate retirement income, despite many having substantial wealth tied up in their homes, new research has found.
The Retirement Compass, produced by Fairer Finance for the Equity Release Council, estimates that 3.7 million homeowner households in the age group will have average retirement income below the Pensions UK moderate retirement living standard. That represents 46% of homeowner households aged 55 to 79.
The figure comprises 1.7 million couples, 1.4 million single women and 600,000 single men. The research points to a significant mismatch between pension provision and property wealth, with some households owning valuable homes despite having comparatively modest retirement incomes.
Of couples aged 55 to 79 with housing wealth of between £200,000 and £399,999, 44% are expected to fall below the moderate retirement standard. Even among couples with at least £400,000 of housing wealth, 21% are forecast to fall short.
Single female homeowners appear particularly exposed. The report estimates that 65% of single female homeowner households aged 55 to 79 have, or are on course to have, retirement income below the moderate threshold. Their average housing wealth is £225,000.
Among the 1.4 million single female homeowners below the moderate standard, about 700,000 have housing wealth of between £200,000 and £399,999 and a further 200,000 have more than £400,000.
ATTITUDES TO LATER LIFE BORROWING SHIFT
The findings also suggest that attitudes towards borrowing in retirement are changing more quickly than actual engagement with the later life lending market.
Only 13% of homeowners aged 55 to 79 had previously considered equity release, although 52% said it was becoming more acceptable to have a mortgage in later life. Some 56% said having a mortgage in retirement was becoming more common.
A third of homeowners in the age group said it was likely or very likely that people like them might use equity release or a later life mortgage, rising to 59% among those aged 18 to 54.
However, when homeowners aged 55 to 79 were asked what they would explore if they needed to supplement pension income, only 14% selected equity release or a later life mortgage. Reducing spending or changing lifestyle was chosen by 58%, while 57% said they would use savings or investments and 38% would consider downsizing.
Among those asked how housing wealth might be used if accessed, 25% selected paying for care at home and 24% said they would use it to increase pension income and savings.
CALL FOR MORE JOINED-UP ADVICE
The report argues that housing and pension wealth should be considered together more routinely and repeats earlier recommendations for the government and regulators to remove barriers to downsizing and later life lending.
It calls for housing wealth eventually to be incorporated into pension dashboards, for MoneyHelper and Pension Wise to give it greater prominence, and for the FCA to reform later life advice rules. Among its recommendations is that mainstream mortgage advice for customers from the age of 50 should explicitly consider retirement planning and later life lending options.
Will Hale, chief executive of later life lending platform Air, said: “For most people, their home is their biggest asset but it’s not being treated that way when it comes to retirement planning. With the challenges we’re facing as a nation, particularly with millions at risk of shortfalls in retirement, that needs to change.
“The way to combat some of those challenges is to bring the home into the plan. However, at the moment, financial advice is too siloed, and housing wealth ends up being ignored when it could be a central part of helping customers achieve a more comfortable and/or fulfilling later life.”
He added: “Bringing housing wealth into pensions dashboards, for example, would give people a genuine single view of what assets they have at their disposal to meet wants and needs when they finish working.”
Mark Gregory, founder and chief executive of Equity Release Group, said the figures for single female homeowners demonstrated why pension income could provide an incomplete picture of retirement resources.
He said: “For mortgage brokers, this is particularly relevant. Their customers already come to them with questions about borrowing, refinancing and their future financial plans.
“Those conversations provide an opportunity to consider how their needs may change as they approach retirement, and where specialist advice could help.”
Gregory added: “It doesn’t mean every broker needs to become a lifetime mortgage specialist. It does mean recognising when later life lending might be relevant and having a clear route into specialist advice, whether through a trusted referral relationship or by developing the capability to advise themselves.”
Dave Harris, chief executive of more2life, called for a more prescriptive regulatory approach.
He said: “We have been clear that the only way to ensure the best outcomes for consumers is to make it mandatory for both mortgage brokers and financial advisers to flag specialist later life lending products, such as lifetime mortgages, to their clients.”
Harris added: “If the FCA genuinely wants a shift towards holistic advice and improved consumer outcomes, it must make it mandatory for advisers to flag all available options to their clients and set out clear guidance about when a lifetime mortgage may be a suitable solution. Without this level of intervention, nothing will change.”
The Retirement Compass draws on market-wide equity release data for the second half of 2025, economic modelling and consumer research. Fairer Finance said the study was commissioned by the Equity Release Council, but that it retained editorial control over the report.
