Older home owners are facing an average shortfall of nearly £18,000 between the annual retirement income they expect to need and the amount they are likely to receive, according to research by the Equity Release Council and Key.

The report found that home owners over-55 are typically expecting to need more than £35,000 a year in retirement, but in reality the average UK pension income is less than half this sum at  £17,212.

The gap between expectations and reality is at its worst in Yorkshire and the Humber where retirees face a shortfall of £27,723.

This is followed by London and the South West, where the gap is almost £20,000.

Even in the West Midlands where the gap is narrowest, there is still a shortfall of more than £12,000 a year between the amount home owners expect to need and the reality.

The research found that financial pressures such as rising living costs and  mortgage commitments are not only stifling savings and eroding pension pots as one in six respondents plan to draw on their pensions early.

Across the UK the average home owner aged over-55 could release up to £88,290 from their property, but only one in five have sought advice or information about doing so.

Equity Release Council chairman David Burrowes says: “With the UK’s population ageing rapidly, the scale of this issue is only set to become greater. 

“An increasing number of consumers must make their pensions savings last over longer retirements with property wealth fast emerging as a viable solution to help meet this funding challenge.

“Our report emphasises the pension pressures faced by many across the UK and calls for property wealth to be better considered and integrated into the advice process. 

“A single-product solution to retirement planning is no longer fit for purpose. We must break down the silos that create tunnel vision when it comes to later life financial planning.”

Key chief executive Will Hale says: “While even the boost provided by using residential property, investment and savings as well as pensions might not help everyone achieve a retirement income of over £35,000 – which is higher than the average UK salary – it will certainly help. 

“Indeed, taking a holistic approach to retirement planning and ensuring access to good specialist advice will mean that more people are able to enjoy a comfortable retirement.”