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Property remains popular retirement savings tool

Property remains popular retirement savings tool

Category: Retirement
07/02/2018

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

While employer pensions are still considered the safest way to save for retirement, property has been inching closer, a population survey from the Office for National Statistics reveals. The data (recorded between July 2016 and June 2017) shows that 40% believe that their workplace pension is the safest bet, while 30% believe property is.

This is probably thanks to the fact that house prices are still rising, although the most recent statistics from Halifax show that house prices only saw an annual change of 2.2% in January, and actually fell month-on-month by 0.6%. Despite this, house prices are still up slightly, from £219,217 in January last year to £223,285 last month.

Behind property and workplace pensions, the third-safest method of saving for retirement was a personal pension (13%), which has overtaken ISAs (7%) in recent years. Yet despite ISAs now having rates that are worse than non-ISA savings accounts, they are still considered safer, with only 5% considering savings accounts the safest.

Being safe doesn't mean being lucrative, however, as further statistics show that property is by far considered the most lucrative (49%). What's more, less people are feeling confident that their workplace pension can make them the most money, with 22% being down from the 24% who thought so between July 2014 and June 2016.

There's further disparity between safe and lucrative retirement options, as stocks and shares are considered the third most lucrative (with 9% of the population thinking so) but the least safe, with only 1% considering it safe. Still in fourth place but falling are ISAs, with just 6% of people thinking these can make them the most money.

As for where people expected their income in retirement to come from, 84% of non-retired adults expect most of their retirement income to come from their state pension, followed by their occupational or personal pension, savings or investments, downsizing and future inheritance.

What next?

While saving into a pension is important, you could consider putting aside some money into a stocks and shares ISA as well. This offers the tax safety of an ISA, with the potential stock market gains that come from stocks and shares. However, as you may be left with less than you originally invested, be careful where you choose to invest your money and remember that it's a long-term investment vehicle.

To get the most out of your property, make sure you take advantage of the best mortgage deals. Once you've got your mortgage paid off, you'll have the option of equity release instead of moving into a smaller house.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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