LONDON, March 4, 2020 - More than 2.5 millionTooltip over 55s are planning to sell their properties over the next 12 months to release cash, with £89 billionTooltip expected to move into savings accounts as a result.
This is according to new research from Ford Money, which reveals that more than one in 10 (13%) over 55s are expecting to release equity trapped in their homes in the next year by moving to a cheaper location or a smaller house, with a further 8% planning to do so over the next five years.
Those planning to sell this year expect to receive £85,250 each – but far from splashing the cash, most over 55s are taking a sell and save approach. Downsizers plan to save an average of 52% of the equity they release – £44,330 eachTooltip – for an average of six years.
Of those planning to save some or all of their new cash wealth, four in five (79%) intend to use cash savings accounts, while 16% of those who plan to save are considering investments or stocks and shares ISAs.
Suzanne Lewsley, Chief Deposits Officer at Ford Money, said: “Many over 55s are asset rich but cash poor, so it’s unsurprising that as the property market shows signs of heating up again, this group is looking to release the wealth trapped in their homes to bolster savings.
“But regardless of who or what it’s being saved for, it’s important they are depositing their newfound savings in the right place. Cash savings are a sensible, low risk investment option for people nearing retirement but, with over 55s those aged 55+ planning on hoarding theirequity for a little over 6 years, they need to ensure they aren’t only choosing the right type of product, but also the best possible rate for the long term, so that they can grow their money further.”
Fixed rate savings accounts are the most popular for those planning to save the capital released from their homes in the next year (52%), followed by notice savings accounts (44%), regular savers (41%) and easy access accounts (39%). A third (35%) of over 55s are planning to use an ISA, which anyone planning on moving before 6 April should consider, as they allow savers to grow their money tax-free.
Suzanne Lewsley added: “Over 55s have big ambitions for their money – and we want to help their property wealth go as far as possible. At Ford Money, our ISAs and fixed rate accounts offer fair and consistent rates that make it easy to manage your money for the long term, with no short-term bonus rates. Our Best Rate Guarantee means that all our customers, both new and existing, are paid the same interest rate on variable rate products – giving them peace of mind that their savings are in safe hands while they decide how or when to spend it.”
Far from the ‘Bank of Mum and Dad’, over 55s who plan to move in the next year are more likely to want the cash released from their homes to supplement their pension pot in retirement (44%), pay for holidays in the future (39%), or build a ‘rainy day’ fund (35%).
Despite many putting themselves first, a third (32%) do still plan to use some of the money they save to support family members financially in the future – most commonly children (66%) and grandchildren (43%) (and in some cases, great-grandchildren (23%)).