During your career, there comes a time when a retirement plan is something you should start planning for early to secure your retirement days or future. You may begin to think of the different retirement plans available that would suit you. However, you may not want your retirement plan to be the end of your financial freedom, so you will want to explore all the available options. In any case, transitioning to your retirement plan should be a gradual process that leaves you with fewer commitments and responsibilities.

What if you are torn between buying property or having a pension plan? First of all, you need to distinguish between the two of them. A retirement plan is to save, invest, or distribute investment to sustain you during your retirement. A pension plan falls into the retirement plan category whereby your employer contributes on your behalf to a pool of investment funds that will benefit you on retirement. However, it depends on your age, the company, and the number of years you have worked there.

Buying a property or saving for retirement?

Many earners get confused when it comes to deciding whether to buy a property or save for retirement. Investing in property has been the ultimate choice for many people based on the belief that property guarantees maximum return benefits in the future. Buying property has been on the bucket list of many people who are trying to secure their retirement. It allows one to enjoy the resale value in the future and fund their retirement. They take advantage of the ‘buy and hold’ strategy, which involves purchasing a property then holding it until its value increases so that you can get the resale value. During the whole time, one may rent out or let the house while its value increases.

Suppose you rely on a salary as your primary financial asset. In that case, you need to be careful when making a retirement investment since a small mistake could mean a significant change in your financial standings. You can’t imagine investing in off-plan property, and unfortunately, the project never gets complete. Educate yourself first on the challenges that come with real estate investments and then make a decision.

On the other hand, a pension seems like a flexible option with few risks. As long as you are employed, you are eligible for a pension plan. It allows you to contribute to a long-term savings plan with tax relief at the contribution point and income investment. The money that could have been absorbed by the government as tax adds up to your pension pot.

How about a pension scheme? Many employers enroll their employees in pension schemes. However, ensure the workplace pension plan works for you before you register. Otherwise, you may risk a mis-sold pension that threatens all your retirement benefits. The most discouraging part of mis-sold pensions is that you realize later on that you were misled into a risky or low-performance pension investment.

Can you invest in property through a pension?

You may be asking f you can invest in property through your pension. It is possible, but stringent restrictions are surrounding that in regards to investments by small self-administered schemes commonly known as SSAS. The regulations are usually put in place to ensure that the find is established for the primary purpose of providing pension benefits or other retirement benefits. Here, you need a pension expert’s advice to determine a retirement plan that is workable for your case and if you are exposed to any risks.

The bottom line

It is worth weighing the two options to find what is workable for you. Remember that what works for another person may not be suitable for you. You not only have to rely on pension plans to cover your retirement, but you can also distribute your investment for security. Nevertheless, it is may never wise to put all your eggs in one basket. You can have a pension plan and invest in property as well. That way, your investment will be well-distributed, and you can reap from both sides.

Compare listings