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Tenants face looming pension crisis warns business consultancy

Renters are much less likely than homeowners to have at least a moderate income in retirement according to business consultancy Hargreaves Lansdown. 

The ‘moderate income’ relates to the definition of the Pension and Lifetime Savings Association as £20,800 per year for a single person and £30,600 per year for a couple.

Hargreaves Lansdown says 56 per cent of younger homeowners were on track compared to just 15.5 per cent of private renters.


Only 13 per cent of baby boomers who rented have saved enough.

Some 57 per cent of couples who were homeowners were on track compared to just under half of single homeowners.

But only 18 per cent of couples who rented were on course in comparison to 15 per. ent of single renters.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, says: “Renters have a huge loomg 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.”

She says 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 provision. 

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. 


Morrissey adds: “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.”

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    It's the way most people live today, have now pay later, I fully expect that the pension age will soon increase to 70, many will have to work well past this age if they want any standard of life.

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    If you can't save to buy a house when you are renting how on earth can you save for a pension? Retirement may become an unachievable goal for the masses.

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    Poorer countries have a different system. Instead of relying on the state or pensions, the family helps each other. The children do not leave home early, struggling to pay for independent accommodation. Many generations live in the same household. Whoever can work pools the income for the whole household. There is no need for child care or social care as the rest of the family is there to help. Sometimes this is extended to a neighbourhood / village, where everyone helps everyone.

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    This report doesn't surprise me.

    Working hard, saving hard and planning ahead are qualities which go together and allow home ownership and comfortable retirement.

    Avoiding hard work, spending more than you earn and no thought for the future also seem to be traits which go together.

    Those with the latter "qualities" can only comfort themselves that their indolent lifestyles, poor diets etc. will probably limit the length of their more miserable and less productive lives.


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