Nearly five million people have reported that in order to fund their retirement they plan to rent or sell property, a figure that has worried investment management firm Barings.
A survey of over 1,500 non-retired people revealed that the number of people planning to use property to fund their retirement has increased by eleven per cent from last year, and is at its highest since 2009.
The research was collected by Baring Asset Management which has warned that people need to be made aware of the risks involved in using property to help fund their retirement.
Marino Valensise, chief investment officer at Barings, said: “Property can form part of a risk-adjusted, diversified investment portfolio but this year’s survey indicates that more people are investing in property as a retirement source and the concern is that this could mean they are over-concentrated in the asset class.
“It is worrying that the number of people relying exclusively on their property to fund retirement has increased.
“Property prices can be volatile so putting your faith in your home to fund retirement is risky.”
Five per cent of people also admitted that they are planning to sell their primary residence to fund their retirement, and the amount of people planning to sell or downsize their property to fully fund their retirement has doubled in the last year.
This is the equivalent of 1.5m people, and four per cent of the population.
A sign of an acceptance in relying on property as a retirement source has also been seen through the decrease in people claiming that they have never planned to fund their retirement in this way.
In 2009, over half of the population claimed they had never consider using property for their retirement fund, but through the 2013 Barings survey it has been revealed that this number has now dropped down to a third of people surveyed.
Marino Valensise concluded: “Young and old need to fully appreciate the level of risk involved in expecting to fund your retirement through the use of a volatile asset such as their own home, or from other properties such as buy-to-let.
“Investing for your retirement is about long-term planning and as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded.
“It is imperative that people diversify their investments through a range of assets which can, of course, include property.”