Is pension safe as houses?

Sale of property may not pay for your retirement, so don’t bank on it for a later-life windfall

QI’VE never had a pension. I’ve always thought if I continually bought bigger houses there would come a time when the one I was living in was too big for me and I could downsize, thereby releasing money to live on when I retired. What do you think? Norman S, Glasgow

ATHIS is a great question and one I’ve probably been asked more than most others over the years. Huge rises in property prices over the last couple of decades have meant many of us have used the mantra that “property can’t fail” to justify not bothering with a pension and, in fact, refusing to look at retirement planning at all because there will always be a house to sell and generate capital. “I don’t need a pension, I’ll just sell my house when I retire.” If I had a penny for every time I’d heard someone say that, I wouldn’t have needed a pension either. Property price inflation can be traced back to the original right-to-buy schemes championed by ex-prime minister Margaret Thatcher in the early 80s. Local authority housing stock was sold at huge discounts to tenants on the basis we would all be “better off ” if we owned our own homes rather than continuing to rent.

It turned us into a nation obsessed by the concept of home ownership at any cost and the idea that we had to be making money from owning these homes.

To make matters worse, there isn’t an adequate supply of goodquality publicly owned housing available at affordable prices for those who can’t, or don’t want to, get on the housing ladder.

A house is a place to live – it’s not a place to make money from. We need to change our attitude towards the reasons we buy houses in the first place.

Whether house prices rise or fall, and you make or lose money from your house, you need a roof over your head.

Your house can either be somewhere to live – in which case it’s your home – or an investment to provide income or some cash when you sell it. It can’t be both.

This line of thinking assumes you will be able to sell your house when you want to retire and get the amount of money you think it is worth.

That’s not always going to be the