Pension savers who will still be paying rent in retirement will need a pension pot as high as £445,000 to avoid falling living standards, according to research from Royal London.
The analysis suggests that savers will need to build up a retirement income equating to two-thirds of their gross wages to maintain their standard of living.
Using this guideline, the report found that while an average earner will need a pension pot of around £260,000 to afford a comfortable retirement, those renting will need to save an additional £185,000.
This comes after separate research from the Department for Work and Pensions, which showed that people aged 35 to 54 are twice as likely to be renting than the same age group 10 years ago.
Helen Morrissey, personal finance specialist at 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.
“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.
“For all of these reasons, we cannot afford to be complacent about current levels of retirement saving.”
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