Property vs pensions

This article offers general guidance about balancing financial priorities. It is not financial advice. 

Friends and family often share well-intentioned financial wisdom – especially when it comes to property and pensions. Perhaps some of these sound familiar? 

• “It’s better to pay your own mortgage than somebody else’s” (about the benefits of buying a home, not renting) 

• “Being mortgage-free is the best pay rise you’ll ever get” (as a motivation for paying off your mortgage early) 

Or:  

• “The best time to start a pension was yesterday, the next best time is today” (about the benefits of saving for your retirement as early as possible). 

All these sayings ring true. But whichever stage of life you’re at, these two big financial priorities – property and pensions – are often in competition with each other. Do you focus on saving hard for your first home (and then paying off your mortgage faster), or trying to stuff money into your pension for a better retirement?   

Is it ever best to prioritise one over the other? Or should you put your money into both? Let’s size them up and see which one comes out on top! 

Introducing our contenders…  

Property

Weighing in at £270,000[¹], the average UK home has been bulking up lately. House prices have risen by more than 35% over the past 10 years[²], driving some people to buy out of FOMO or hope for a profit, while others question if they’ll ever get on the ladder.

What property has going for it:

• Owning your home brings security and stability

• No rent to pay in retirement – this would quickly drain your post-work finances

• You can sell property if you need to

• Saving for a deposit can be boosted in a LISA

Pensions

Weighing in at £138,000[³], the average pension pot by age 55 is underweight… but never the underdog! Pensions have great tax-efficient benefits to boost long-term saving and the earlier you start, the better the results.  

What pensions have going for them: 

• Paying for life in retirement is essential – the State Pension won’t be enough 

• The earlier you save, the more chance your money has to grow* 

• Savings are boosted by tax relief and employer contributions – a win-win!  

* Capital at risk. You might get back less than you put in.

Spoiler alert: the best option is usually a team-up 

When asked about their financial resolutions for 2026, more people said they’d save for a house (13%) rather than increase their pension contributions (10%)[⁴]. It’s close, but it’s not hard to understand why property takes the lead: the need is more visible and immediate. 

It’s natural to get sick of paying rent or living with parents while you save for a house, and to want to speed up the process by pouring all you can afford into a deposit. But trying to free up money for a home by opting out of your workplace pension, or by reducing contributions, can have a big impact down the line.  

When you delay or deprioritise your pension, and don’t have other plans to pay for retirement, you impact the future lifestyle you’ll be able to afford. And it’s not just because you’ve put less money in your pension. It’s because you’ve also missed out on years of employer contributions, tax relief and compound growth. (Watch our pension growth video to see why starting early makes such a difference!) 

So in an ideal world, you’d keep contributing to your pension slowly and steadily throughout your working life, to reap the benefits of long-term investing. You wouldn’t press pause on it until you get on the property ladder or have paid off your mortgage. But what’s right for you? 

Only you know your priorities and personal situation. And if you already have a solid plan for a home or income in later life, that will likely make a big difference. Whether you do or not, if you need help figuring out your plan and timelines, you could pay to speak to an independent financial adviser. 

Can’t my home pay for my retirement? 

Some people put all their faith in bricks and mortar to fund life after work.  

By selling their home and buying a smaller one when they retire, they hope to free up a sizable sum. Other people use ‘equity release’ to borrow money from the value of their home. But relying on a property to fund retirement could be risky. 

It’s hard to predict what property values will do over the long term. Maybe they’ll continue to rise and, when you’re ready to retire, you’ll get a payout you’re happy with. But maybe not.  

If all your savings are tied up in your home, you’re entirely dependent on it getting a favourable valuation later. With a pension, the value also goes up and down over time but your money is ‘diversified’: spread out across thousands of different investments to manage the risk.  

Isn’t the State Pension enough for retirement? 

Other people rely on the State Pension in retirement.  

But the fact is that this doesn’t go very far. To qualify for the maximum State Pension, you need to have paid National Insurance for 35 years. Available when you turn 66 (68 if you were born after 1978), the current maximum payout is only £230.25 a week. That’s £11,973 a year. Think you could live on that? 

Using the Retirement Living Standards as our guide, the State Pension doesn’t come close to providing an adequate income. While the ‘minimum’ suggested retirement income is £13,400 each year, a ‘comfortable’ retirement could need as much as £43,900 each year. 

Knowing how much money you might need in retirement, or at least setting a rough target, can help you keep track of whether you’re saving enough. Use the Retirement Living Standards to guide you – and remember that their suggestions assume you’ll have paid off your mortgage. You’ll need to increase the estimates if you think you’ll still be renting, as this could make a huge difference to your monthly outgoings. 

Should I pay more towards my property or pension? 

If you’ve got some extra cash to save each month, because you’ve paid off a regular bill or earned a bonus, would you be better off increasing mortgage payments or pension contributions? 

To help you figure out the best answer for you, check out this month’s video with Cushon savings pro, Amy Staines. 

All the best with balancing your big-ticket life goals! 

[¹] https://www.gov.uk/government/news/uk-house-price-index-for-december-2025

[²]  https://www.architectscertificate.co.uk/news/uk-average-house-price-increase-last-10-years

[³] https://www.forbes.com/advisor/uk/investing/average-pension-pot-in-uk

[⁴]  https://www.pensionsuk.org.uk/news/article/savers-reset-financial-goals-for-2026-as-pension-contributions-move-up-the-priority-list

Article by

NatWest Cushon