Renting retirees need ‘pension mountain’ to avoid fall in living standards
New research suggests that retirees who rent will need a £445,000 pension pot to maintain living standards.
According to Royal London analysis, those who have to pay rent upon reaching their retirement will have to save a “pension mountain” if they don’t want to see a fall in their standard of living.
For the average earner, the research found that £260,000 was the general size of pension pot required, having fallen slightly from the £290,000 peak observed last year.
Whilst this figure assumes that people stop work at 65 and have a state pension on top of their savings, it’s also calculated on the basis that retirees will have paid off their mortgage.
Of course, for tenants who are non-homeowners, this is not the case. Helen Morrissey from Royal London said: “If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build a much bigger pot than in the past.
“More worrying still, we can no longer assume that we will be mortgage-free homeowners in retirement. For those unable to get on the property ladder during their working life, a large private rental bill needs to be factored in to retirement planning.”