Millennials and Generation Z are increasingly turning to both pensions and property to secure their financial future in retirement, in a marked shift from the single-asset strategies favoured by older generations.

New research from Standard Life’s Retirement Voice study shows that 56% of Millennials and 62% of Gen Z expect to rely on a combination of pensions and property to fund their retirement. In contrast, only 25% of Baby Boomers and 29% of Gen X say the same.

Among Baby Boomers, pensions remain the most popular retirement asset, with 40% expecting to rely on their pension alone. By comparison, only 26% of Millennials and 34% of Gen Z see pensions as their main retirement income.

Property alone is the top choice for 38% of Gen X, compared to just 15% of Millennials and 4% of Gen Z.

DIVERSIFIED STRATEGIES

The figures point to a pragmatic shift in attitudes among younger generations, who appear more inclined to diversify their retirement strategy. That shift comes amid growing affordability challenges in the housing market and uncertainty around the long-term value of pension savings.

The challenges facing today’s younger adults are reflected in their living arrangements. According to the research, 33% of Millennials and 56% of Gen Z are currently renting or living with loved ones, highlighting the difficulty many face in getting on the housing ladder.

While property remains an important long-term asset, Standard Life’s findings suggest that younger people are aware of its limitations. The difficulty of accessing housing equity in later life – whether through downsizing, equity release, or relocation – may be leading some to rethink its role as a sole retirement income source.

Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said: “Younger generations seem to be taking a more flexible approach to retirement, seeing both pensions and property as key parts of their financial future.

“It’s smart to build a well-rounded plan, with as many bases covered as possible. While pensions offer tax perks and employer contributions, property provides long-term security and, crucially, a roof over your head.

“Those who are unable to or who choose not to get on the property ladder through their working lives and rent in retirement will need additional savings to cover housing costs alongside day-to-day expenses.

“Gen X is in a unique position, falling between the era of widespread Defined Benefit pensions and the introduction of auto-enrolment in 2012 while often benefitting from a more accessible housing market than Millennials – making property a more viable option for them.

“The key for everyone is to plan ahead and keep all options open.”