No.
There are very few occasions when a property will substitute for a properly organised pension arrangement or retirement plan. Many people believe that their property is their pension. It may be that in exceptional cases an individual may be able to release monies from their home or other property investments which will be sufficient to provide income in retirement. However, this plan of action has so much wrong with it that it does appear to be a recipe for disaster should anyone rely on their property to fund their pension. A number of reasons can be spelt out:
- Even in retirement we all have to live somewhere and we will need a home.
- The assumption in the statement ‘my property is my pension’ does seem to imply that property prices will continue to escalate in-line with the average escalations of the past 20-30 years. With recent falls in property prices and with the example of Japan to bear in mind, there is nothing to say that even over long periods of time, property prices will rise and certainly the period from 1993 to 2008 was exceptional in terms of property increases and is unlikely to be replicated in the future.
- The key to good retirement planning is to have diversity, not put all of ones eggs in ones basket. To have a range of investments and savings plans that make up a retirement portfolio. For many people who ignore pension planning and just rely on property, this diversity argument is completely lost on them.
The conclusion of this is that property, whilst historically a very good investment, should not be seen as a substitute for a pension plan and certainly recent history with property prices falling should cement this argument ever further. |
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