State support will be the sole source of retirement income for 1.6 million renters approaching retirement
New research from Just has revealed that over half of UK renters aged 50-65 are relying on State Pension and benefits for income in retirement.
For many people, retirement can last a significant amount of time, so it’s important to try to make sure you have enough savings and income to enjoy a comfortable later life.
However, our research has revealed that this isn’t the case for many Britons approaching retirement. Many face a retirement where they will have to rely on the State Pension and benefits for retirement income, and it’s a particular problem for those who rent instead of own their home.
Financial security in retirement
Our research uncovered that 56% of UK renters approaching retirement say they currently have no workplace or personal pension, and will be solely reliant on the State Pension and benefits for income in retirement.
It also revealed that homeowners of the same age are more likely to have additional income alongside State Pension or benefits. More than three in five homeowners (62%) have the additional resource of a workplace or personal pension in place, compared to only two in five (40%) renters in the same age group.
This means that renters are 22% less likely than homeowners to have workplace or personal pension pots to support them in retirement.
Feeling unprepared for the future
This expected lack of additional income in retirement comes with an increased feeling of being unprepared for the future.
On average almost half (47%) of all pre-retirees said they feel unprepared for retirement. However, there’s a significant difference between those who rent and those who own a home. Only 37% of homeowners feel unprepared for retirement, compared to 70% of renters.
And the research also highlights a disparity in financial confidence, with 28% of homeowners saying they feel financially confident compared to only 11% of renters.
Revealing a gender gap
Our research also revealed a noticeable difference in attitudes and preparedness between men and women of this age group.
Pre-retired men are much more likely to have a workplace pension than women, with 64% of men having a workplace pension compared to 48% of women in this life stage.
Planning a path to retirement
Stephen Lowe, Just Group’s communications director, commented: “This research shines a light on how different retirement looks for people who rent compared to those who have a property.
“There’s the obvious issue that people who rent won’t have the financial asset of property to fall back on in retirement, but what we have discovered is something more fundamental about people’s saving for retirement. To put it bluntly, no house and no pension – because if you’ve been able to buy a house, you’re also more likely to have retirement savings.
“For this group of people aged 50-65 who don’t own a house, they may feel retirement is coming close and with no pension and no property they have limited options – but that’s not necessarily the case.
“Someone who’s fifty today will receive the State Pension at age 67 – giving them 17 years to save for retirement if they continue to work. That saving could prove invaluable in later life and provide what they need for the odd luxury or cover some of those unexpected bills in retirement.
“The same is true for those who do own a property but have no private pension savings. They will have the value tied up in their home which they can use to supplement their income in retirement, of course, but they also have the opportunity to build up a retirement pot.
“Regardless of whether you own or rent your home the single most useful thing you can do to prepare for retirement is to have a plan. There are plenty of resources available, from meeting a regulated financial adviser through to the Government’s free and impartial guidance service Pension Wise. It’s important everyone is aware of the options available to them, no matter what their situation.”
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