Almost half of 35-54 year olds say property will act as a pension, despite more than a fifth not being home owners, according to research from the Pensions and Lifetime Savings Association (PLSA).
It also means these people could see their retirement prospects dented if house prices stall.
People in the East and London are the most likely to plan to rely on property in retirement.
Britons in this age group – so-called Generation X- are also failing to properly plan their retirement, with more than half say they are too busy with day-to-day living costs to consider long-term saving, showed the research.
Graham Vidler, director of external affairs at PLSA, said: “Over eight million people between the ages of 35 and 54 intend to use property to help finance their retirement. Given the significant house price growth that we have seen, this might seem an entirely sensible addition to their pension.
“However of this group, two million people have yet to even take their first step onto the property ladder which is a real concern and suggests they are basing their future financial security on an unrealistic ambition.”
He added: “In addition, over half of Generation X admit they have no plan, or a vague plan of how they will finance their retirement which is also incredibly worrying.
“The majority of Generation X find themselves in the unenviable position of being too young to benefit from generous defined benefit pension schemes and too old to receive the full benefits of automatic enrolment.
“They need support in understanding how their pension, property and any other savings might top up their state pension to give them a decent income in retirement.”