23% plan to fund retirement with property they are yet to buy

23% of people are planning to fund their retirement with a property that they have not yet purchased.

8.3 million people aged 35-54 have stated that in order to finance their retirement, they intend on buying property. However, the research from the Pensions and Lifetime Savings Association indicates that of this number, 23% are still yet to buy property at all.

The Association question the security of these prospective finances, stating that these individuals may be basing their retirement expectations “on an asset they may never own”.

The data also indicated that over a third (36%) of 35-44-year-olds yet to get onto the property ladder believe that their future home will help them in retirement; 14% of 45-54-year-olds in the same position agree.

On a national level, the research indicates that reliance on future property ownership is the lowest in Yorkshire and the Humber at 2%, and the greatest in the east at 14%. In London alone, around 330,000 people – or 13% – intending to finance their retirement with a property they have not yet purchased.

Commenting on these figures was Graham Vidler. The Director of External Affairs at the Pensions and Lifetime Savings Association highlighted his concern over the figures, as well as the need for greater support to be provided to the so-called ‘Generation X’.

“Over eight million people between the ages of 35 and 54 intend to use property to help finance their retirement. Given the significant house price growth that we have seen, this might seem an entirely sensible addition to their pension. However, of this group, two million people have yet to even take their first step onto the property ladder which is a real concern and suggests they are basing their future financial security on an unrealistic ambition.

“In addition, over half of Generation X admit they have no plan, or a vague plan of how they will finance their retirement (57%) which is also incredibly worrying. The majority of Generation X find themselves in the unenviable position of being too young to benefit from generous defined benefit pension schemes and too old to receive the full benefits of automatic enrolment.

“They need support in understanding how their pension, property and any other savings might top up their state pension to give them a decent income in retirement. The government should assess the best ways for Generation X to engage with retirement income planning and, in particular, consider whether interventions related to key life events, such as a mid-life financial health check, would result in better outcomes.”

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