'Sleepwalking into crisis!' – Mortgage free in retirement 'is a rapidly vanishing dream'

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Renters are much less likely than homeowners to be on track to have a moderate income in retirement, according to the latest findings of the Hargreaves Lansdown Savings and Resilience Barometer. Over half (56.4 percent) of Gen Z homeowners are on track compared to just 15.5 percent of renters.

It was a similar picture for Generation X with over half (52.2 percent) on course while only 17 percent of renters could say the same.

Only 13.3 percent of baby boomers who rented have saved enough.

The research also showed that couples were more likely to have a moderate income in retirement than single people.

Some 56.9 percent of couples who were homeowners were on track compared to just under half (49.4 percent) of single homeowners.

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“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.”

Ms Morrissey offered some suggestions as to what could be behind these alarming figures.

She said: “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.

“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.”

Ms Morrissey believes increases in the cost of getting on the property ladder has had a big impact on Britons’ financial planning.

She said the “spiralling” costs present a significant risk of ruining people’s retirement.

She continued: “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.

Ms Morrissey warned that 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,” she said.

“Increasingly, we will enter retirement with outstanding mortgage debt that needs to be repaid. This all puts extra pressure on our retirement planning.”

She concluded: “While the Gen Zs and millennials have time to get on the housing ladder, potentially pay off their mortgages and boost their retirement saving time is running out for older people.

“The Baby Boomers look particularly exposed with only around one in eight renting boomers on track for a reasonable retirement.”


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