Pensions vs property: why I see saving for a pension as a gamble

This is the second part in a three part series where our 26-year-old blogger questions the value in saving up for a pension over saving up for a deposit on a property or putting money into an ISA. Read part one here.

My dad works part time in a ticket office at a local, one train an hour kinda station.

For years he shared the role with Bob. Bob did mornings, Papa C did afternoons. Bob used to be a train driver but due to health reasons had been forced to move into the booking office for around five years before he retired. As a former train driver, and someone who had worked for the railways before privatisation, Bob had built up a substantial pension pot. His plan was to move to South East Asia the minute he could retire, he spent all his holidays there and was quite clearly counting down the days until he could live out his retirement dream.

However, earlier this year and the day after Bob returned from a two week holiday in Thailand, Bob dropped down dead on the street on his way to work. Bob had worked for all these years just so he could enjoy the perks of retirement which he never got.

It is stories like these that really put me off paying into a pension scheme, I see it kind of like gambling, you’re paying out money every month in the hope that you ‘win big’ when you come to retirement. But, being a millennial, I can’t see myself ever really retiring, let alone spending more of my life retired than working as many pensioners today do.

I can’t see myself ever really retiring.

Before I go any further I should point out that I have never had a pension. Auto-enrolment hasn’t kicked in where I work yet.

I could pay into a private scheme but to be honest I wouldn’t know where to begin looking and I have a fairly limited disposable income so I would rather use what little money I do have to pay off my current debts and building a good savings pot than planning for a future I might never have.

This is why the Lifetime ISA looks appealing to young people like me. When it launches in 2017, it will provide those under 40 with the chance to save up to £4k a year with a further top up of 25% from the government if we don’t touch it until we’re 60 or buying our first home. To someone like me with no obvious route to save into a pension and an income that allows for some saving but this can vary month by month, this is great offer. Firstly because the £4k limit is achievable (just… ish… we will see…) and it makes me want to hit the limit, therefore encouraging me to save. But also because I will be able to access my money should I need to at any point (unlike regular pension schemes), I’ll just lose the bonus. And cos it has the word ISA (a word I know and understand) its not scary like the P word (pensions).

I would rather use what little money I do have to pay off my current debts.

As a millennial the constant changes in pensions and retirement ages confuse me. (Plus what is going on with the tax?!)  If the state pension age keeps going up there is a high chance that I would have paid in far more than I could have paid out (or at least it feels that way). No one can provide a clear answer of what pensions will look like in 10 years, let alone in 50 years. When someone can definitively tell me ‘you will be retiring at XX and receiving XX amount each month’ then investing in a pension might seem like a sensible idea but for now I’ll keep my cash and my fingers crossed for the future.