Many Britons are now thinking that investing in property is the best way to plan for retirement. In fact, there are more people who believe this to be a better investment than those who think a pension is the best choice.
This highlights the confidence that people now have in the property market and so it will add fuel to the fire when it comes to planning for retirement. In fact, when the Bank of England chief economist stated that property was a more lucrative investment than a pension it got alarm bells ringing for many.
Even though pensions come with tax benefits and employer contributions, it is still the belief that property investments will make their money work harder and so they will gain more financially.
It is possible to access a pension fund from the age of 55, it is only possible to access the money in a property by selling it and this can cause problems, especially for those who have plans to continue to live in it, want to downsize or want to release equity, all of which can prove costly. In recent years, investing in buy-to-let has offered good returns but recent changes to stamp duty and tax relief could make it difficult.
Up to July 2016, property prices had increased by 8.3% and this shows that people still believe in property as an investment.
A pension scheme comes with safety but residential property generates considerable returns in comparison and so that is why many believe it to be the best choice. Saving cash is less appealing now, given that interest rates have dropped. However, regardless of more people believing that investing in property is the way forward, they also still believe that pensions are the safest bet.
When it comes to pensions it seems as though many people are ill-informed and so it makes it difficult for them to make the right decision regarding how they should save for retirement. The other issues is that many people have thought about how long they will be in retirement for and so they will need to consider how much they save.
There is a lot of different information and advice out there, regarding whether people should save through a pension or a property. The details surrounding returns is complicated although many people see their property as a home and not a source of income during retirement.
Surveys carried out have also found that people see the value in their property to be something that is completely separate from their retirement fund.
In reality, pensions are appealing because of the tax relief and contributions from employers. However, many are confident that the income they will have during retirement will be sufficient enough to help them sustain a standard of living that will provide them with a happy retirement.