The UK's retirement savings gap — where does property wealth fit in?

Only 9% of UK adults received professional financial advice in the last 12 months, according to commentary published by Money Marketing. Decisions about when to draw a pension, how to take income in retirement, and how to balance different assets are being made — in millions of cases — without any professional input at all.

That matters for homeowners approaching or in retirement, because property wealth is often the largest single asset they hold. Yet it is routinely absent from retirement income conversations.

The pension picture: decisions made without information

Nearly half of defined contribution pension pots are now being fully withdrawn as cash. For smaller pots — those under £30,000 — 70% are accessed without any advice or guidance at all. And 79% of DC savers have never reviewed where their pension is invested, meaning the fund may have grown, shrunk, or drifted into inappropriate risk levels without the saver being aware.

These are significant decisions. Taking a pension as a cash lump sum rather than as drawdown or annuity can have long-term tax and income consequences. Leaving pension assets unreviewed risks poor performance or inappropriate risk weighting for the stage of life. Yet millions of people are making these choices without a full picture of their options.

The missing piece: property wealth

For many homeowners in their 50s, 60s and 70s, the home is the largest component of their total net worth — often larger than the pension pot and savings combined. But when people think about retirement income, they tend to focus on pension and savings, treating the property as a separate question or as something to pass to family rather than as a potential income source.

"Property wealth is often the biggest number on a homeowner's balance sheet and the last one to be considered when planning retirement income."

This is partly a knowledge gap and partly a structural one. Pension providers prompt people to think about drawdown. Financial planners focus on investments. Property wealth — sitting in the family home — tends to sit outside that conversation unless someone specifically asks about it.

How property wealth can complement pension income

Releasing a portion of property equity does not mean giving up the home. A lifetime mortgage or retirement interest-only (RIO) mortgage allows homeowners to access some of the value tied up in their property while continuing to live there.

In practical terms, this can help with a range of retirement income needs:

• Covering a gap between pension income and monthly outgoings, without running down savings
• Making a large one-off purchase — a care adaptation, a holiday, a family gift — without drawing down the pension early
• Deferring pension drawdown to a later age, potentially reducing tax exposure or improving the ultimate pension position
• Bridging income before state pension age for those who have retired early

None of these is the right answer for every situation. The right approach depends on individual circumstances — pension type and value, existing savings, health, family priorities, and what the property is worth. The starting point is simply knowing that property wealth is an option, and understanding broadly how it works.

This page is informational. It describes how home equity can factually complement other retirement income sources — it is not a substitute for personalised financial planning, which for decisions of this scale is worth seeking from a qualified specialist.