Only 18 per cent of those living in rented accommodation are on track for a ‘moderate’ retirement income, compared to 51 per cent of those who have bought their own homes, according to new data.
The figures, from Hargreaves Lansdown, are the latest to point to the damaging impact on retirement resilience from long-term renting.
The data, from HL’s savings and resilience barometer for January 2024, shows this issue affecting retirement savers of all ages.
For millennial and Gen Z households one fifth of renters in track for moderate retirement income, compared to over half of homeowners. But this issue is more stark for the older Generation X cohort, with 15 per cent of those in rented accommodation on track for retirement compared to 56 per cent of homeowners.
These figures come after a policy paper by the Pensions Policy Institute (PPI) said rising house prices and the growing number of people in private rented accommodation was a major threat to retirement adequacy.
Hargreaves Lansdown head of retirement analysis Helen Morrissey says: “Long-term renting risks leaving our retirement resilience in ruins.
“Spiralling house prices have made it much more difficult for people to buy their first home. People are either buying later or not at all, and those that do get that all important toehold on the ladder are often taking longer mortgage terms so they can keep their costs low.
“This is having an enormous impact on people’s ability to prepare for retirement. This not only impacts their ability to save, they also need to save much more to account for the fact they have to pay housing costs into retirement.”
She adds: “The picture gets decidedly grimmer the older you get. Only 15 per cent of Gen X and baby boomer households who rent are on track for a moderate income and with the clock ticking down to their retirement many risk having to make some tough decisions around needing to work longer or reducing their retirement expectations to make ends meet.”
