Around 46% of homeowners in this age group, or 3.7 million people, are facing retirement on less than £31,700 a year, according to the Later Life Finance Index.

That is below the figure of £32,700 per year that Trade body Pensions UK has calculated that £32,700 is the deems necessary for a “moderate” standard of living for a single retiree.

Produced by Fairer Finance for the Equity Release Council, the index found that 66% of all homeowners in this age group, or 2.45million people, have housing wealth worth more than £200,000.

The average amount of housing equity owned by 55-79 year-old homeowners, including those with higher and lower projected retirement living standards, is £350,000.

Single women are more likely to face a shortfall, the research revealed.

It found that 65% of single female homeowners aged 55 to 79 are expected to have retirement incomes below “moderate”, despite holding an average of £225,000 in housing wealth.

Among single male homeowners, 44% are projected to fall below the moderate living standard, while the percentage is 37% for couples.

Both single men and women hold average housing wealth of £225,000, while couples hold an average of £275,000.

The study also found that 1.8 million homeowner households aged 55 to 79 have between £200,000 and £400,000 of housing wealth, while a further 650,000 hold at least £400,000.

Despite this, relatively few older homeowners appear willing to use property wealth to fund retirement.

When asked how they would supplement pension income, 58% of homeowners aged 55 to 79 said they would reduce spending or adjust their lifestyle, while 38% would downsize and 28% would continue or return to work. 

Just 14% said they would explore accessing property wealth.

While 70% of homeowners aged 55 to 79 said they were aware of equity release, only 13% had previously considered taking out a lifetime mortgage.

Attitudes towards borrowing in later life appear to be changing, particularly among younger consumers. 

The study found that 59% of adults aged 18 to 54 believe it is becoming more acceptable to have a mortgage in later life, up from 34% in 2021.

Fairer Finance director Tim Hogg says: “It’s important to help people save more into their pensions, but if we focus on pensions alone then we overlook a major asset that millions of households already hold.

“Our research shows that huge numbers of people heading for a retirement income shortfall are sitting on significant housing wealth which could bridge the gap, if they want it to.

“The picture is particularly stark for single women, who face the highest risk of low living standards in retirement, despite often owning homes worth hundreds of thousands of pounds.

“We need policymakers, regulators and firms to work together to overcome the barriers that are preventing people from seeing their pension and their property as part of the same financial picture.”

Equity Release Council chief executive Jim Boyd says: “Following the Pensions Commission’s recent warning that 15 million people are under-saving for their retirement, Fairer Finance’s research explains how housing wealth can provide a lifeline for our rapidly ageing population and transform retirement living standards.

“As attitudes towards later-life lending continue to evolve, it is vital that people can access clear information, appropriate advice and products with strong safeguards, so they can make informed choices about what is right for their circumstances.

“The challenge to Government and regulators now is to create a system that helps consumers consider all their options in the round and use their assets more effectively to support financial wellbeing in later life.”