Andy Foote of SevenCapital was speaking earlier this month and said, "at some point during their career, many people will question, pension or property? As the retirement age rises, and the cost of living increases, this age-old debate is becoming increasingly common."

In the UK retirement age is edging closer to 70 for a lot of us, but the average amount required for a ‘moderate’ retirement is now reaching £20,200 per year, per pensioner. With the standard pension pot only just exceeding £61,000, it’s no surprise that property is often more desirable than pensions.

In recent years, the reliability of this investment has been questioned, with many professionals remaining on the pension side of this debate. But for those with property firmly in their sights we’ll discuss what should be considered:

Investing Sooner Rather Than Later

While investing for a comfortable retirement often forms part of many long-term plans, these intentions often don’t materialise. Previous SevenCapital research among 1200 UK residents revealed that almost all respondents had goals of securing financial freedom further down the line but 41.3% admitted to having zero investments.

Similarly, out of the 40.30% of respondents wanting to invest in property, only 19% had begun building their portfolio. When you decide to start investing for your retirement can be crucial to how it turns out, but generally speaking, maximising the time between investment and when you plan to take your retirement is essential.

Depending on whether you have dreams of spending your retirement on a sunny beach, or simply continuing your current lifestyle, this will be an indication of how and when to invest. With a ‘comfortable’ retirement for two now requiring £47,000 per year, this milestone is a key motivator for over 70% of UK investors.

So, by investing early, you’ll not only be able to establish a clear investment plan with long-term goals in place, but you’ll be able to use the monthly income from your buy-to-let property to build a healthy savings pot for a comfortable retirement. Additionally, if you decide to eventually sell your property, this could also form part of your retirement fund.

Diversifying Your Portfolio

If you’re one of the many investors who has chosen property either to replace or supplement a pension, diversifying your portfolio should be a key consideration. While having a single buy-to-let property can often generate competitive returns, having multiple different properties could both boost your retirement fund and reduce the risk of your overall investments.

Diversification can be achieved in many ways, including investing in various property types, in different areas and at different price points.

One of the most common routes for those looking to maximise their investments is investing in a combination of property types, whether this be a mix of commercial and residential, or solely residential property.

For residential landlords, having a portfolio made up of different buy-to-let properties – such as houses and apartments – can mean reaching a wider demographic of tenants, from families to young professionals. With each of these property types offering different benefits; one-bed apartments may offer higher rental yields but slightly lower capital growth, for example, investors can benefit from multiple income streams.

Rental yields are also heavily influenced by location, meaning a selection of properties across different regions could minimise the effect of changing tenant demands while boosting your retirement funds on a long-term basis. For example, the so-called London ‘exodus’ we have seen over the past 12 months could have been critical for those who have invested solely in London property, whereas a balance of city and suburban spots can increase the resilience of a portfolio.

Preparing for Taxes and Outgoings

Whether property is already part of your retirement plan, or you’re exploring the asset as an alternative, knowing what to expect in terms of taxes and outgoings can give you a more accurate idea of what to expect of your retirement fund.

Pension or property, chances are, you’ll likely be paying income tax throughout your retirement. It’s no secret that buy-to-let property comes with a lot of considerations, such as stamp duty land tax and capital gains tax. While the stamp duty holiday has been making the market more accessible for investors, this is a crucial consideration for those considering incorporating Buy-to-Let property in their retirement route.

There are many avenues that come with property, such as the opportunity to either maintain your portfolio throughout retirement and have a consistent, monthly income, or to sell your empire and have a healthy pot for the remainder of your retirement. Although any profits made will be subject to capital gains tax, the performance of the property market we have seen over the past 18 months in particular could see your retirement pot grow in value over the years.

Property has long been a flexible investment asset, especially when it comes to retirement. While some may invest their pension pot into buy-to-Let property, it can also be used as an additional revenue stream leading up to or during retirement.

Like all investments, property comes with various considerations, but for those who are investing early and diversifying their portfolios with an awareness of any and all taxes, buy-to-let property offers the potential to secure a comfortable retirement.