Why the young have to be obsessed with property
At a retirement dinner this week the age old debate of house versus pension reared its ugly head.
As is typical in these scenarios, the older attendees of the dinner bemoaned young people's lack of forward planning when it comes to their old age, shunning pension saving in order to get a foot on the property ladder.
The argument was that we shouldn't be tying our money up in bricks and mortar but investing for our retirement (ignoring of course the fact that many pensioners plan to use their pensions to buy more property).
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These arguments always send my blood pressure up for a number of reasons.
The first reason is because of the double standard that is inherent in the 'why do you even need a house' argument. The answer to their question is complex – it is a combination of growing up in a country where joining the ranks of the property owning elite means you've made. It is also the fact that we have seen parents and grandparents as homeowners and want a piece of the pie.
And that's before you even get into the argument of being beholden to landlords and held hostage by increasing rents.
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Short-sighted
It seems remarkably short-sighted to me that older generations would tell young people to 'adopt the European model' and rent for their entire lives because, like failing to save into a pension, this will surely present its own problems in retirement.
By the time homeowners get to retirement most have paid off their property and only have their bills to cover. But if you get to retirement and you don't own a property, how will you pay your rent?
The thing about retirement income is that it doesn't tend to go up and you can't earn more because you're retired. If you're living on a set income for 20 years, how much of it will be increasingly eaten away by rental inflation each year.
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We can no longer rely on the state to house people, by the time millennials retire it will a miracle if there is any social housing left.
Yes, of course we should be saving for retirement and we know that but for many in their 20s and 30s, buying a property is as much part of their retirement plan as putting money into a pension.
Millennials will need income when they retire but they will also need a place to live and no one else is going to provide that.
Read more:
It's not hard to see where the freed pension money is going
The problems with pension freedom
How Newton's third law applies to pension freedoms
