It’s important to have a diverse retirement plan that consists of multiple ways to save and grow your pension and retirement funds. While property has historically been a great investment, it shouldn’t be viewed as a complete replacement for pension savings. So, should you use your home as your pension fund?

Diversity is the key

The reality is, you shouldn’t focus on one area too much – make sure you have a variety of investments and consistent pension contributions to ensure a happy retirement. 

However, if you are contemplating whether or not property can really be enough to replace a pension when it comes to retirement savings and investments, consider the potential return on your investment and any tax you may be liable to pay. 

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Return on investment


It’s true that property has always been a good investment – UK house prices have grown by around 34.7% over the last decade. And while if you go the buy-to-let route, you could get a boost from rental income throughout the years, unless you’re saving or investing the profit, it won’t be much use to you later on in life. 

But the housing market can be a fickle thing, so if you plan to downsize and use the profit from the sale of your home to finance your golden years, you might fall short. 


On the other hand, the UK stock market has expanded by a whopping 63.9% over the last decade. With automatic enrolment rules in effect, if you qualify, your employer also contributes to your pension, so that added to what you pay into it, the extra money can really grow over time.

To be successful in the stock market, you need to be in it for the long haul. So, weather the storms as the tide inevitably changes.



If you’re going with buy-to-let properties, when you purchase your properties, you’ll need to pay stamp duty land tax (SDLT) which will apply when purchasing multiple properties. And you’ll need to pay income tax on the rental income as long as you own the property. Plus, when you sell your home you’ll have to pay Capital gains tax (18% or 28%) on any increase in property value. 


Unlike property dealings, pensions are tax-efficient money wrappers. As long as they’re contained in your pension, you won’t have to pay income tax on any dividends or interest from investments and you don’t have to pay capital gains tax on any growth. 

You can access 25% of your pension tax-free when you retire, the remaining will be subject to taxation though. But, if you only withdraw the money when absolutely necessary and space out withdrawals over different tax years, you can control your taxable income and pay less tax. 

Pensions do have annual caps on investments and if you have an NHS pension plan, be mindful of tapered allowances which could affect your tax liability. Speak to your financial adviser for support on this.

Get professional advice

After a long career, your retirement should feature lots of relaxation and time spent with your family and loved ones. That’s why it’s important your retirement savings plan supports the retirement lifestyle you want. It’s not the best plan of action to count on your home as your pension. It’s better to have a mix of investments and savings, including both property and pension.

Dental & Medical Financial Services have been helping doctors and dentists prepare for retirement for many years. If you need financial advice to start your planning book a consultation.

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