Yahoo Finance Retirement crisis: UK housing problems put pressure on pensions
UK renters face a looming pension problem and risk sleepwalking into a retirement crisis, a new report says.
According to Hargreaves Lansdown's Savings and Resilience Barometer, tenants are much less likely than homeowners to be on track to have a moderate income in retirement.
Figures show 56.4% of Gen Z homeowners were on track to receive a moderate income in retirement compared to 15.5% of renters.
This trend was repeated across all age groups, with 57.9% of Millennial homeowners on track in comparison to 17.1% of renters and 52.2% of Generation X homeowners on track compared to 17% of renters.
The gap in the Baby Boomer age group was less severe, with 35.6% of homeowners due a moderate income in retirement compared to 13.3% of renters.
"Renters have a huge looming pension problems and risk sleepwalking into a retirement crisis," said HL's senior pensions and retirement analyst, Helen Morrisey.
"Across all generational groups, renters trail their home-owning peers when it comes to being on track to achieve a moderate retirement income."
Morrisey offered an explanation for the barometer’s findings: "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," she added.
Morrisey also said that it is a "grim" outlook for those who face retirement with little pension and no home without the help from the bank of mum and dad.
Recent research from Savills showed parents helped almost half of all first-time home purchases in 2021.
The barometer also found that couples were more likely to be on track for a moderate income in retirement than those who are single, both as homeowners and renters.
Over half (56.9%) of homeowning couples and 17.8% of renting couples were found to be on track for a moderate income in retirement, compared to 49.4% of homeowning singles and 15.2% of renting singles.
"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," Morrisey said.
Read more: Cost of living crisis: Women hit harder by rents than men
It comes after a separate report showed women in the UK were the hardest hit by the cost of living squeeze as soaring inflation grips the nation.
According to data from SpareRoom women are most likely to feel the pinch with increased energy bills and looming national insurance tax hike.
The flatshare site said over 85% of women are spending 30% or more of their income on rent, compared to 75% of men, highlighting the affordability gap between men and women.
Traditionally, people spending over 30% of their household income on rent are deemed to be "rent burdened", while those who spend more than 50% are considered "severely rent burdened".
