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Financial experts are trying to work out how to play the generation game as workers of different ages are opting for property pensions instead of traditional cash savings.
A recent survey laid bare how different generations treat their finances.
A third of younger Generation Z workers born after 1996 are opting to fund their retirements with property pensions even though only one in 10 can afford to climb onto the property ladder, says a study from pension firm Standard Life.
The finding contrasts with the baby boomer generation, already in or approaching retirement. Some 42 per cent favoured a pension, while 18 per cent chose property.
The gap closed with millennials born between 1981 and 1996. Investing in property for retirement lifted to 22 per cent of the age group, with 36 per cent saving into pensions.
The trend, noted Standard Life, is for younger adults to shift their retirement planning to property rather than pensions.
The research also showed that 35 per cent of Generation Z consider their homes a source of wealth to draw on, especially in retirement. However, only 24% of millennials and 20% of baby boomers thought the same way.
Standard Life asked 6,000 people across different age groups about their financial retirement plans. The research highlighted that younger adults have unrealistic views about property as a pension, with so few already owning a home and 20 per cent worried they will continue paying a mortgage into retirement.
Separate research by Phoenix Insights found that 13 million households will face paying rent or a mortgage in retirement - while one in three are not confident they will ever get a mortgage.
Dean Butler, managing director for retail direct at Standard Life, said: “The fact that those closest to retirement age favour pensions gives us an insight into what most people end up doing when it comes to their retirement income.
“Both options have their merits, but for young people, it’s perhaps understandable their initial focus is on property given the significant barriers to getting on the housing ladder today.
“Relying on one asset alone for your retirement can be risky, so it’s sensible, if at all possible, to build up a more diversified portfolio that’s made up of different funding options and not to overlook the benefits of pensions as well as easy access ‘rainy day’ savings.”
Property investment is more flexible than a pension but still has some drawbacks.
Although owners can draw down on cash stored in the equity of their homes at any time, most people's property is their home. To access the money, they must remortgage, downsize, move to a cheaper area or consider equity release.
Summing up, Phoenix Insights says people cannot save for the future if they cannot make ends meet today.