To retire, renting millennials will need 50% more in savings than homeowners

 The analysis, which was conducted in Canada, assumes that the millennial worker with a starting salary of CA$60,000, enjoys a total contribution of 10 per cent of their monthly salary to a savings plan. It is also based on the assumption that workers start to save at 25. 

 Meanwhile, the research defines retirement readiness as “a 75 per cent probability of not running out of money before death.”

 To attain a reasonable retirement income, home owning Millennials only need to save 5.25 times of their salary to be able to retire at age 65. Meanwhile, renters need to save eight times their salary to be financially ready and retire at 68 years old. 

 In addition to not facing an uphill battle to be financially fit for retirement, the report also noted that homeowners in retirement do not have the same cost of living as renters do.

“Homeownership also gives retirees flexibility, as retirees who downsize may be able to access a significant amount of money. Renters, conversely, must pay rent every month or face eviction — whether they are 25 years old or 85 years old,” the report said.

But the report noted that there are compounding factors that are making a comfortable retirement out of reach for Millennials. 

It highlighted that in an environment where the cost of living continues to rise and housing affordability continues to decline, many millennials may become “resigned to renting”, having been permanently priced out of the market. 

“Compounding these retirement challenges is the issue of debt, as the rising cost of living causes consumer debt to mount – preventing many working people from saving for either a down payment or a retirement,” the report stated. 

Tags:

• Latest

Share