In our recent series of articles we have been looking at how the changing state pension age could affect your retirement plans and steps you can take to improve your chances of retiring early.
While retirement may seem a long way off for today’s millennials, this generation is facing increasing pressure to plan ahead for their futures, in no small part due to longer life expectancies and salaries failing to keep pace with inflation and the rising costs of living.
New research from Canada Life has revealed that the UK’s younger generations are three times more likely to rely on property wealth to fund retirement than their predecessors, which is no mean feat when millennials are finding it harder than ever to get on the property ladder.
The research highlighted how just under one in ten (9%) of 16 to 54-year olds expect the wealth held in their homes to function as their main source of income in retirement – this is three times the number of those aged over 55. Furthermore, just 21% of under 55s think their savings will cover their retirement needs and only a half of those surveyed think their state or workplace pension will suffice.
It is thought this shift in retirement funding has been partly driven by the reduction in generous defined benefit pension schemes enjoyed by previous generations versus the more common defined contribution schemes that today’s workers are paying into.
With millennials increasingly seeing their pension pots tied up in property, the research points to equity release moving into mainstream financial planning as a way for those reaching retirement to help clear debts and fund lifestyle enhancements.
If you would like to talk to an adviser about your retirement plan, please contact Finura.
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