Retirement warning for Brits born between 1965 and 1980 – ‘most at risk’ | Personal Finance | Finance

Millions of Britons born between 1965 and 1980 could be heading towards a retirement shortfall, with experts warning that Generation X is among the groups most at risk of running out of money later in life. New research has suggested many Gen Xers are “sleepwalking” into retirement despite building wealth through property ownership, as they missed out on the generous workplace pension schemes enjoyed by older generations.

According to analysis by wealth manager Rathbones, people in this age group are almost twice as likely as Baby Boomers – those born from 1946 to 1964 – to own a buy-to-let property. However, they are less likely to hold tax-efficient investments such as ISAs, potentially leaving them overly reliant on the housing market. The warning comes after the Pensions Commission’s interim review identified Generation X as one of the most vulnerable cohorts in the UK’s retirement system.

Many entered the workforce just as final salary pension schemes were disappearing, while automatic enrolment had not yet been introduced. As a result, many failed to build the level of pension savings enjoyed by previous generations.

A survey of more than 3,000 UK adults found that 17% of Gen X respondents owned a buy-to-let (BLT) property, compared with just 9% of Baby Boomers. Yet only 66% of Gen Xers held an ISA, compared with 78% of Baby Boomers, and 45% had other investment accounts, compared with 52% of older respondents.

Rebecca Williams, Financial Planning Divisional Lead at Rathbones, said: “Many Gen Xers are sleepwalking into retirement with far less financial security than their parents.

“They came of age as defined benefit pensions were disappearing and have since faced years of stagnant wage growth and repeated financial shocks, making it harder to build robust long-term savings.”

Ms Williams said many people in Generation X are also part of the so-called “sandwich generation”, supporting both children and ageing parents while trying to save for their own future.

She added: “It’s perhaps no surprise that property – particularly buy-to-let – has been seen as an alternative route to funding retirement. But relying on property as a pension can leave retirees overly exposed to a single, illiquid asset at a time when flexibility is most needed.”

Rathbones also warned that the strong house price growth seen by previous generations is unlikely to be repeated. Between 1980 and 2016, UK house prices rose by an average of 6.7% a year, but since 2016 annual growth has slowed to around 3.7%. In London, average annual growth has fallen to just 1.3%.

By comparison, stock market investments have delivered significantly stronger returns over the same period. Rathbones estimates that £100 invested in London property in 2016 would now be worth around £111, compared with £174 if invested in equities.

Isabella Galliers-Pratt, Senior Investment Director at Rathbones, said: “The conditions that fuelled the property boom have long since changed.

“The idea that property is always a ‘safe bet’ no longer holds true in many parts of the country.”

She added that pensions continue to offer valuable tax advantages and access to diversified investments, making them a more effective long-term retirement planning tool for many savers.