Renters are much less likely than homeowners to be on track to have a moderate income in retirement, according to the latest findings of the HL Savings and Resilience Barometer.
Over half of Gen Z homeowners, or 56.4 per cent, were on track, compared to only 15.5 per cent of renters. For Generation X, the situation was similar, with over half or 52.2 per cent on track, compared to only 17 per cent of renters.
Only 13.3 per cent of baby boomers who rented have adequate money saved. In comparison to slightly under half or 49.4 per cent of single homeowners, 56.9 per cent of couples who were homeowners were on track. But only 17.8 per cent of couples who rented were on track, compared to 15.2 per cent of single renters.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Renters have a huge looming pension problem and risk sleepwalking into a retirement crisis. Across all generational groups, renters trail their home-owning peers when it comes to being on track to achieve a moderate retirement income. Even those who rent with their partner are significantly less likely to be on course with their pension planning than those couples who own their own home.
“One potential explanation is that those who manage to become homeowners are better at planning their money in the first place so are more likely to make retirement provisions. However, it could also be that the cost of saving for a deposit leaves no room to save for anything else or it deters people from even trying in the first place. We also can’t discount the huge impact of the Bank of Mum and Dad. Recent research from Savills showed parents helped almost half of all first-time home purchases in 2021. Either way, it is a grim picture for renters who face retirement with little pension and no home if they don’t have parents who can help them.
“We know the cost of getting on the housing ladder has spiralled and this has had a significant impact on our financial planning and risks ruining our retirements. Those who don’t manage to get on the housing ladder need to find the money to keep paying their rent throughout their retirement years. This is a significant extra cost to account for in an already stretched budget.
“Even those lucky enough to get on the housing ladder will realise the idea of reaching retirement mortgage-free is a rapidly vanishing dream. People are buying later in life and mortgage terms are rising. Increasingly, we will enter retirement with outstanding mortgage debt that needs to be repaid. This all puts extra pressure on our retirement planning.
“While the Gen Zs and millennials have time to get on the housing ladder, potentially pay off their mortgages and boost their retirement saving time is running out for older people. The Baby Boomers look particularly exposed with only around one in eight renting boomers on track for a reasonable retirement.”
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