Millennials and Generation Z are increasingly planning to rely on a mix of property and pensions to fund their retirement according to new research from Standard Life.
The survey of 6,000 people found that 56% of Millennials and a similar share of Gen Z expect both property and pensions to play a role in their retirement income.
That is roughly double the proportion of Generation X (29%) and Baby Boomers (25%) who take the same approach.
Older groups remain more likely to favour a single primary source of retirement income.
GENERATION X
Baby Boomers are most likely to rely solely on pensions, with 40% citing this as their main retirement asset while 38% of Generation X expect property to be their main source of funds.
Despite property being a significant aspiration, younger generations still view pensions as a cornerstone of their long-term financial planning.
A quarter of Millennials and a third of Gen Z expect pensions to be their primary retirement asset, compared with just 15% and 4% respectively who say they will rely mainly on property. By contrast, 33% of Baby Boomers and 38% of Generation X see property as their principal retirement income source.
HOUSING MARKET DIFFICULTIES
Difficulties accessing the housing market appear to be shaping these attitudes. One third of Millennials and more than half of Gen Z are currently renting or living with family, making property ownership a less certain option.
Attitudes also shift with age. While older generations may once have seen housing wealth as central to their retirement planning, many have since recognised the practical challenges of accessing equity through downsizing or relocation.
FLEXIBLE APPROACH
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, says: “Younger generations seem to be taking a more flexible approach to retirement, seeing both pensions and property as key parts of their financial future.
“It’s smart to build a well-rounded plan, with as many bases covered as possible.
“While pensions offer tax perks and employer contributions, property provides long-term security and, crucially, a roof over your head.”
KEEP OPTIONS OPEN
And he adds: “Those who are unable to or who choose not to get on the property ladder through their working lives and rent in retirement will need additional savings to cover housing costs alongside day-to-day expenses.
“Gen X is in a unique position, falling between the era of widespread Defined Benefit pensions and the introduction of auto-enrolment in 2012 while often benefitting from a more accessible housing market than Millennials – making property a more viable option for them. The key for everyone is to plan ahead and keep all options open.”
