With more millennials prioritising getting a foot on the property ladder over saving money to fund a comfortable retirement, 35% of this generation are said to be putting their pension pots on the backburner in order to scrape together enough money to purchase a property.⭐Continue reading for the facts and figures⭐
With the cost of student debt, increasing house prices and frequently changing jobs commonly cited as reasons for not saving towards their retirement, many millennials are hoping that by investing their money in property, they’ll be able to finance their golden years.
But Is This a Mistake?
The standard retirement ages climbing and uncertainty surrounding the future of the state pension. It seems that the reliance on releasing equity from the property to finance retirement is becoming increasingly popular. It looks set to continue in the coming years. But should property prices slump, many could find themselves on the breadline and without the funds, they need to enjoy a happy retirement.
It’s always a good idea to start saving for retirement as soon as possible. But this can be a challenge. For the 19% of millennials who say that they can’t stretch to saving for both retirement and property at the same time.
The average age for first-time buyer is increasing. Most people celebrating their 30th birthday before applying for a mortgage. In one in seven cases, those that fall within the 35 to 54-year-old age bracket have completely given up on the idea of ever owning their own home. Instead, they rely on an already thriving rental property market.
However, mortgages applications are on the up too. Over 365,000 mortgage applications approved in the last twelve months for a borrowing total of £59.9 billion.
This focus on a property is also having an impact on the decreasing levels of younger generations saving in private pensions. With 21% stating that they have still not started saving towards retirement at all. Of course, this could cause significant financial issues later on in life.
Finding the motivation to save towards retirement is tough. But by solely relying on property to finance retirement many millennials are playing a dangerous game. Gambling on a property market that is prone to rises and falls in property values is risky. And something that could leave many facing an uncertain future when the time to stop working rolls around.
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