Property investment ‘most effective retirement plan’

Property investment ‘most effective retirement plan’

Investing in property is seen as a more profitable option than workplace pensions, according to savers.

Summary:

  • Savers favour investing in property over traditional workplace pensions, even taking tax relief and employer contributions into account
  • Landlords view their property investments as “nest eggs” for the future
  • Property’s appreciating value can help provide and maintain a high standard of living after retirement

Property investment is seen as a more effective retirement plan than workplace pensions, according to a new report conducted by the Office for National Statistics.

When asked which option they felt gave better money-making opportunities, 44% of respondents selected property, with workplace pensions falling into second at 25%. Even with tax relief and employer contributions, workplace pensions were seen as a less solid investment than property.

The stability offered by workplace pensions was appreciated in comparison to property, as 41% of respondents selected this as the most secure option. However, due to rising house prices and the demand for rental accommodation, investing in property has become a far more attractive avenue to take.

“For many people now approaching retirement, their property is likely to make a significant contribution to their overall wealth in retirement and will be particularly relevant as a capital reserve for costs such as later-life care,” said Tom McPhail, Head of Retirement Policy at Hargreaves Lansdown.

37% of landlords view their property as a nest egg for the future and appreciate the value building over time, with UK property prices rising on average by 24.2% in the last decade.

Workplace pensions and property investments both comfortably outperformed all other asset categories in returns, including personal pensions, ISAs, and stocks and shares.

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