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Using property for retirement plans?

At Enable our IFA’s many recent surveys suggests that one-in-three people plan to use property to pay for their retirement, one set of research revealed that a third of those if spoke to plan to live on income generated by investment properties, while a little more than half said that they would sell their own home to fund their retirement. Patrick Connolly, an IFA said “People are either able to sell their main property and downsize when they get to retirement or buy additional properties and rent them out.”

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There are lots of reports and surveys that suggest landlords have been enjoying stable yields over recent years, with returns above the low interest rates on savings account. Capital values have of course also been rising too over the last bit of time, encouraging that very British tendency to trust in property.

Despite some of the current figures however, relying on property to keep you warm in retirement could be a risky strategy. “It should be remembered that property prices can fall as well as rise and this will be a real danger when interest rates start to rise and mortgage payments become that bit more expensive.” For landlords there is also the risk that you’ll have periods where your property is empty, so you would have to find the money to pay the mortgage if there is still money owing. You also need to be prepared for the costs and hassle associated with managing a rental property.

From an investment point of view it is always good to diversify, diversify, diversify. Pensions allow you to invest across a broad range of asset classes, and thereby spread your risk, if you want to talk about diversifying for your retirement funds Enables IFA’s in Bishop’s Stortford are happy to talk it all through.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

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