A recent study by Hargreaves Lansdown reveals that only 19% of renters are on track for a moderate retirement compared to 54% of mortgage payers.
Renters face a disadvantage across all age groups, with only 26% of Generation Z renters and 17% of Generation X renters on track for a moderate retirement, compared to 53% and 59% of their counterparts paying a mortgage, respectively.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Renters have a pension problem and lag way behind those paying a mortgage when it comes to pension planning.”
She adds that soaring house prices have led to people getting on the housing ladder later in life or not at all. Consequently, many individuals are entering retirement without having paid off their mortgage or facing the prospect of renting for the rest of their lives.
“These housing costs can add thousands of pounds to someone’s annual budget and mean they have to save far more for retirement than those who have been able to repay their mortgage,” Morrissey explains.
Morrissey emphasises that while younger generations such as Generation Z and Millennials still have time to catch up on their retirement planning, those nearing retirement may need to make tough choices, such as working longer, to get back on track.
“Younger generations – such as Generation Z and Millennials still have time to catch up with their retirement planning, but those getting closer to retirement may find they need to make tough choices around working for longer to get back on track,” she says.
