Blow to pensioners as 1.7 million older households may rent in retirement
Older Britons are being urged to “act now” as 1.7 million pensioners may be forced to rent into their retirement.
New research from the Pensions Policy Institute (PPI) is shining a light on the deteriorating prospects of homeownership in the UK.
According to the think tank’s Renting in Retirement ‘The Fault Line Below the UK Pension System’ report, middle-aged people face retirement without owning an important asset: their own home.
This would to future generations of pensioners being worse off than their parents and grandparents who have relied on property as a vital investment and source of income.
The report’s findings also come at a time when tenants are being straddled with soaring rent payments and a lack of financial security.
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Notably, 17 percent of retirees may still be renting in less than 20 years if the current rate of homeownership among those aged 45 to 64 continues.
The PPI believes that this age group is often overlooked in discussions about getting onto the property ladder.
Furthermore, the share of households in this age group who own their own home has fallen to around three in five today, from around four in five households of the same age 20 years ago.
As well as this, those impacted only have a decade to prepare for retirement with their options to address the situation being limited.
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Anna Brain, the research associate at the PPI, outlined what is at stake for those approaching retirement in the UK.
She said: “By 2041, up to 1.7 million or 17 percent of pensioner households could be renting privately through retirement.
“That’s more than three times as many households as today, of whom only a minority of those with the highest incomes might have the means to cover the cost of renting through later life.
“The increase is caused by years of falling home ownership and a shrinking social housing sector, which together mean that more people are approaching retirement without the secure and affordable housing tenure assumed of them in later life.”
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Ed Monk, an associate director for Personal Investing at Fidelity International, urged over 45s to take action as soon as possible
He explained: “This work to quantify the scale of the coming squeeze on those in retirement is a necessary reality check, not only for the millions of working-age people heading for financial insecurity but also policymakers.
“New solutions will be needed for people who were already under-saving for retirement, but who now also face extra housing costs into their old age. “
“Those aged 45 and over and struggling to get on the housing ladder should act now to put plans in place for their retirement. Working longer, saving more and living more cheaply are all likely to be necessary measures for many.”
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