A new report has found that those who privately rent before and during retirement will need to accrue a pension pot of around £450,000 to live comfortably, whereas mortgage-free homeowners are estimated to need £250,000.

With five million households in the UK currently rented, Quantum Advisory partner and actuary Stuart Price said: “Figures suggest the average annual rent is £6,500, roughly the same amount as your income from the State Pension, and this needs to be taken into account when planning your retirement.

“Already it is evident that people aren’t saving enough with the average pot worth around £35,000 – more than £200,000 short of what it should be, even for mortgage free pensioners. However, homeowners do have the option of downsizing, freeing up further money to supplement their income in retirement.”

Price also noted that as homeowners are entering the property market later in life, due to increasing house prices, the “assumption” of being mortgage-free in retirement is becoming “less of a reality” for many people.

“Finally, expecting the one in four households in Britain who rent to save nearly half a million pounds is a tough nut to crack, but with careful planning, solid advice and increases to minimum pension contributions in the future, which is a necessity, it can be achievable, and the earlier you start, the better,” he concluded.

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