Renters in both the private and social housing sectors have been described as having “a pension problem” by a financial analyst.

Helen Morrissey, head of retirement at business consultancy Hargreaves Lansdown, says only 19 per cent of renters are on track for a moderate retirement compared to 54 per cent of those paying a mortgage.

The term ‘moderate retirement’ is defined by the Pension and Lifetime Savings Association’s Retirement Income Standards.

Morrissey says: “Renters have a pension problem and lag way behind those paying a mortgage when it comes to pension planning. It remains the case regardless of generation – only just over a quarter of Generation Z households who rent are on track for a moderate retirement compared to well over half of those with a mortgage. 

“The picture gets grimmer as you get older with just under 17 per cent of Generation X households who rent on track with their retirement planning.

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

Hargreaves Lansdown uses data from a regular savings and financial resilience measure which it applies to different demographics. 

It is structured around the five pillars of financial behaviour that Hargreaves Lansdown considers fundamental for households to balance current and future demands, while guarding against risks. These are: controlling your debts, protecting your family, saving for a rainy day, planning for later life and investing to make more of your money.