Less than one in five (19%) people renting housing are on track for a moderate retirement, according to research by Hargreaves Lansdown.

By comparison, more than half (54%) of people paying a mortgage are in line for a moderate retirement, as defined by the Pensions and Lifetime Savings Association’s Retirement Living Standards.

The research noted that renters were at a disadvantage across all age groups, with 26% of Generation Z renting property on track for a moderate retirement compared to 53% of Generation Z with a mortgage.

For Generation X the gap was even larger, with 17% of renters in this generation on course for a moderate retirement compared to 59% of those paying a mortgage.

Hargreaves Lansdown warned that by not getting on the housing ladder, people are at risk of having to pay rent in retirement, further increasing the amount they need to save for retirement.

Hargreaves Lansdown head of retirement analysis, Helen Morrissey, stated that renters have a “pension problem” and lag way behind those paying a mortgage when it comes to pension planning.

“Soaring house prices mean people are getting on the housing ladder later, and in many cases not at all,” she continued.

“Those able to get mortgages often get them at much longer terms than the standard 25 years and these trends have long-term impacts across financial planning.

“This means people are increasingly going into retirement without having paid off their mortgage or facing the prospect of having to rent 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.

“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.”


This article first appeared on our sister title, Pensions Age.

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