There are approximately 2 million people in the UK who have used their property to finance retirement, new research suggests.

A fresh study by the Pensions and Lifetime Savings Association (PLSA) looking at how 35-85 year olds currently use or plan to use property to fund their retirement found that downsizing was the most popular with 11% choosing this option to fund their retirement, while buy-to-let and letting holiday homes, at 4% each, came next. Re-mortgaging was the least common choice at 1%.

The study also revealed that 40% of this group have used property to fund luxury or non-essential expenditure, with 19% left feeling as though they had not alternative but to do so.

Younger people are more likely to think of their property as part of their retirement planning. Of the 6 million people in the UK who are not retired and home owners with a mortgage, 53% thought their home would play a part in financing retirement, even though 13% do not expect to pay off their mortgage before they retire.

Some 33% of 35-44 year olds feel they will have no choice but to use their property to finance retirement.

Across all age groups though, there was little support for the commonly-heard phrase ‘my house is my pension’. Only 18% of people agreed with this statement.

Almost three quarters – 73% – of those who had used their property to finance their retirement said that they felt they had made the right choice and 55% of those who released capital from their property told the PLSA that they had put it into savings.

Joanne Segars, chief executive at PLSA, said: “Retirement simply doesn’t look like it used to – the lines are blurring between work and retirement, between pensions and other forms of saving. Pensions, even great workplace pension schemes, don’t operate in isolation any more. They interact with other savings, and as an industry we need to adapt in order to help savers adequately prepare for retirement. That’s why we’ve done this research into how people use property in their retirement planning.

“We’re all familiar with the phrase ‘my house is my pension’ but these headlines from our research illustrate it’s not so straightforward. Some retired people have been happy to use their property to fund their retirement and feel confident about the decision they’ve made, whereas others felt they had no choice. We want to ensure everyone has a decent income in retirement. To help them achieve this we need to understand how people factor property into their plans and we’ll be releasing the full report in a few months’ time.”