If you’re building up capital in a property, whether it’s your own home or a property that you let out, perhaps through a buy to let mortgage arrangement, you may think that it’ll be enough to cover the cost of retirement. After all, what could be more valuable than a home? Nevertheless, relying solely on property to fund your retirement may be a risky business and there are a number of thing that you will need to consider before deciding on the right course of action for your circumstances.

Will money held in property be enough?

The first thing that you will need to determine is the amount of money you are likely to need to see you through retirement. While it’s impossible to put an exact figure on this, a rough idea is important when it comes to making plans for later years. This can be a difficult task so you may want to enlist the help of an independent financial advisor.

The amount of capital you will need to convert into a comfortable retirement income will depend on the state of the market when you decide to retire, whether you wish to purchase an annuity or generate an income via other means, what age you wish to retire at, and your likely life expectancy as well as the level of income that you desire.

Once you have a good idea of the amount that you will need to save, you can start planning your investment strategy in earnest.

Pension vs property, which is the better option?

* Investing in property can offer a more flexible approach than a traditional pension fund, but you will need to resist the temptation to dip into your investment pot early.

* If you are planning on paying for retirement through funds built up in a property that you reside in, will you be willing to downsize when the time comes? Have you taken into account the associated costs of such a move?

* While property may seem like a more concrete and simple investment option, renouncing the traditional pension fund could see you losing out on significant tax benefits and potential employer contributions.

* The value of your pension pot can sometimes fluctuate, but property prices can too. should property prices hit a low when you reach your desired age of retirement you could end up with significantly less than you expected.

* The money that you put into a property is yours (provided your home is not repossessed), and this may leave you with more options for generating an income once you reach retirement.

* Any money you have left in property can be handed down once you pass away, but be wary of the implications of inheritance tax if you plan to do this.

* A buy-to-let arrangement could be used to generate income for retirement but you will need to consider all the risks and responsibilities that come with being a landlord before deciding on whether it is the right option to fund your retirement.

Whether property investment is the right option for you will depend on your attitude to the risks involved, and you may wish to seek professional financial advice. Spreading your retirement savings and investments across a range of options can help minimise the risks associated with any one venture.With careful research and a good deal of financial planning you can determine whether property in the right option for you and you could see yourself on the way to a more financially secure, comfortable retirement.

John Hughes writes for Independent Financial Advisor, a site that provides access to financial advisors as well as to debt advice charities for those struggling with their debts.