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- Continuing to save at the maximum Lifetime ISA (LISA) rate could lead to £204,000 more in retirement
- A £4,000 pension contribution can cost you just £2,400 thanks to pension tax relief
- With average monthly rental costs slightly higher than average mortgage repayments, buying property could allow for a greater focus on long-term saving
Buying a first home is a major milestone – often the result of years of disciplined saving. The average Brit achieves this goal just before turning 341, and while the deposit may be paid and the keys handed over, that doesn’t mean the savings journey has to stop. In fact, continuing to save at a similar rate, rising by 2% inflation - this time into a pension - could leave people £204,000 better off in retirement, according to Standard Life2.
Maintaining the habit of regular saving can have a powerful impact on long-term financial wellbeing and for those who’ve been saving into a Lifetime ISA (LISA), the routine of setting aside money each month is already familiar. Once the property is purchased, switching that contribution to a pension could be a natural next step - one that builds on existing habits while unlocking significant future gains. What makes pension saving particularly powerful is the combination of tax relief on contributions and potential employer top-ups through auto-enrolment – meaning the money saved has the chance to go further from the outset.
£4,000 can go a long way in a pension
When it comes to making your money go further, pensions can offer even greater value than a LISA over the long-term. Higher-rate taxpayers, for example, could either contribute £4,000 more efficiently (at a personal cost of just £2,400), or use the same £4,000 to make a much larger pension contribution worth £6,666:
| Scenario | Cost to you | Government top-up /Tax Relief | Total value in account |
|---|---|---|---|
| LISA (flat 25% bonus) | £4,000 | £1,000 (25%) | £5,000 |
| Pension – Basic Rate (20%) | £3,200 | £800 (20%) | £4,000 |
| Pension – Higher Rate (40%) | £2,400 | £1,600 (40%) | £4,000 |
| Pension - £4,000 net contribution for Basic Rate taxpayer | £4,000 | £1,000 (20%) | £5,000 |
| Pension – £4,000 net contribution for Higher Rate taxpayer | £4,000 | £2,666 (40%) | £6,666 |
Compounding, meaning further growth on earlier investment growth, can then take effect. Someone who starts working at age 22 on a salary of £25,000 and pays the minimum auto-enrolment contributions (5% employee, 3% employer) could build a pension pot of around £210,000 by age 68, adjusted for inflation. However, someone who added an additional £4,000 annually - the maximum you can save into a LISA - from age 34 onwards and increased their contribution by 2% each year for inflation could see their pension pot grow to £414,000, an uplift of £204,000, thanks to the power of compound investment growth over the decades:
| Minimum contributions (5% employee, 3% employer) from 22 years old | Minimum contributions from 22 years old, plus additional contributions of £4000 per year starting at 34 years old until 68 |
|---|---|
| £210,000 | £414,000 |
| +£204,000 |
*assuming 3.50% salary growth per year, and 5% a year investment growth. Figures account for 2% inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. £4,000 per year is the maximum you can contribute to a LISA. The £4,000 additional contribution then rises by 2% inflation each year.
Of course, buying a home brings new financial responsibilities including mortgage repayments, home insurance, and maintenance costs. For those who were previously renting, the monthly outgoings may remain similar or even slightly reduce, with recent data showing the average monthly cost of renting is £129 more than the average mortgage repayment3 - potentially allowing for a greater focus on long-term saving. For those who were living with family or friends and not paying rent, the money once saved for a house deposit may now be needed for mortgage payments, making it more challenging to maintain the same level of saving – but even small contributions add up and can lead to a meaningful pensions boost.
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “Buying your first property is an exciting moment – and it’s also a great opportunity to start making meaningful progress toward your longer-term financial goals. While it’s natural for new homeowners to focus on immediate priorities like mortgage repayments or family plans, continuing the habit of regular saving - this time into a pension - can be a smart and seamless next step. You’re simply maintaining a behaviour you’ve already mastered, which makes it easier to stay consistent without feeling the pinch.
“This approach not only reinforces good financial habits but also empowers you to take control of your retirement planning early – and thanks to employer contributions and tax relief, pension saving can come at a surprisingly low cost. Turning property ownership into a springboard for lifelong financial resilience is a smart move – and your future self is likely to thank you for it.”
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Media enquiries
For further information, photos, video content or interviews, contact:
Cezary Grabski
Standard Life
07812406077
cezary_grabski@standardlife.com
Notes to editors
1 - First-time buyer statistics UK: 2025
2 - Calculations assume the following:
| Starting Salary | £25,000 |
| Employer Contribution | 3.00% |
| Employee Contribution | 5.00% |
| Investment Growth | 5.00% |
| Salary Growth | 3.50% |
| Inflation | 2.00% |
| Annual Investment Cost | 0.75% |
Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes.
3 - Rents soar by £221 in 3 years to outpace mortgage rises - Zoopla
About Standard Life
- Standard Life is a brand that has been trusted to look after peoples’ life savings for 200 years.
- Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
- Standard Life is part of Phoenix Group, one of the UK’s largest long-term savings and retirement businesses. We’re proud to be building on 200 years of Standard Life heritage together.
- Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
- We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs and plan a future they feel confident about.
- The value of investments can go down as well as up and may be worth less than originally invested.