Gen Z expects property to be their main retirement asset, with 33 per cent planning to rely on it, despite only 10 per cent currently having a mortgage, according to a Standard Life report.
According to Standard Life’s Retirement Voice report, Millennials favour property at 22 per cent and Baby Boomers at 42 per cent.
Furthermore, only 24 per cent of Millennials, 24 per cent of Gen X, and 20 per cent of Baby Boomers think of their homes as possible sources of wealth, compared to 35 per cent of Gen Z.
Meanwhile, around 30 per cent of Gen Z plan to rely on pensions instead while Baby Boomers favour relying on pensions at 42 per cent and Millennials at 36 per cent.
Standard Life managing director for workplace Gail Izat says: “It’s understandable that younger people expect property rather than pensions to fund their retirement as buying property is likely to be their biggest current financial goal, and pensions less of a priority. However, in many ways it’s far harder for Gen Z to rely on property alone than previous generations – they’re facing higher house prices compared to their salaries, higher mortgage costs as well rising rental costs preventing many of them from saving enough to buy.
“This underlines the importance of employers and providers engaging with people of all generations, and making sure products, services and communications are relevant to each audience. Open finance tools can help people view their finances in the round – and could show how owning property and saving into a pension aren’t mutually exclusive, and can instead sit together as part of a diverse portfolio.
“Pensions have a number of advantages such as tax relief on contributions, employer contributions and the potential to benefit from investment growth. On the downside, pension savings can’t be accessed until the minimum pension age, and people with a Defined Contribution pension will need to assess how long it needs to last when considering how much to save and how much to take each month in retirement unless they take an annuity.
“With property, there’s the option to sell before the minimum pension age but for most people, their property will be their home – so to access any money they’ll have to downsize, move to a cheaper area or consider equity release. Equity release can be valuable for people without any other assets but its important anyone considering this takes advice to make sure it’s right for them.”
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