Lifelong renters need to save 50% more for retirement than homeowners: Study

Rows of residential towers in a dense urban cityscape.

A new Mercer Canada study says millennials who are lifelong renters would need to sock away 50% more cash than homeowners in order to save enough for retirement.

As the housing market grows more unaffordable, there’s more bad news for young Canadians who feel like they will never own a home.

A new study by consulting firm Mercer Canada says millennials who are lifelong renters will have to save 50 per cent more than their home-owning counterparts to have enough money in retirement.

One of the main reasons is that homeowners can reap the benefits of home appreciation, lower shelter costs in retirement and more financial wiggle room from built-up home equity.

“Homeownership also gives retirees flexibility, as retirees who downsize may be able to access a significant amount of money,” the report said.

“Renters, conversely, must pay rent every month or face eviction – whether they are 25 years old or 85 years old.”

The analysis was based on the assumption of millennial workers having a starting salary of $60,000 and a contribution of 10 per cent of their salary (including an employer-matching program) per month to a savings plan.

The study found young, lifelong renters would have to save eight times their salary to be “ready” to retire at age 68, while a millennial who owned a home would only need to save 5.25 times their salary and would be able to retire three years earlier at age 65.

Affordability in the housing market has deteriorated as higher interest rates ripple through the economy. The big jump in borrowing costs has kept many would-be buyers in the rental market for longer. That, combined with immigration-fuelled population growth, has led to a surge in average monthly rents.

The average rent in Canada rose nearly 10 per cent in February year-over-year to $1,984 per month, according to the latest rent report. That number can be bigger or smaller depending on the region.

It shows rents have eased in recent months, but the latest figure still marks an increase compared to February 2020, when the national average rent was $1,786.

“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 locked out of the market,” the Mercer report said.

“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 downpayment or retirement.”

How millennial renters can get ahead

Lifelong renters need to ensure rental costs are properly factored into their budget now and in their future retirement years, according to Jillian Kennedy, partner and leader of defined contribution and financial wellness at Mercer Canada.

She suggests millennials take full advantage of any workplace retirement and savings programs offered, including employer matching programs.

“Another advantage of participating in a workplace program is that there are typically lower investment management fees due to the group pooling arrangement compared to investing as an individual. Company contributions and lower group fees can help a millennial save more for their future,” Kennedy told Yahoo Finance Canada.

“Millennials are often focused on their short-term needs, but if they don’t take advantage of their employer-provided benefits, they lose access to money they can’t get later.”

The Mercer report also suggested renters could consider working for longer or delaying their Canada Pension Plan and Old Age Security benefits until age 70.

Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.

Download the Yahoo Finance app, available for apples and Androids. powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 slot zeus nolimit city sv388 slot jepang scatter hitam slot thailand link slot thailand 777 slot powergaming88 slot luar negeri slot gacor maxwin slot gacor hari ini slot gacor terbaru mahjong ways 2 slot thailand jp slot slot bni slot bri slot bsi slot danamon slot gopay slot server korea slot malaysia slot amerika slot rusia fan tan monopoly live lightning roulette mega ball sweet bonanza candyland mega sic bo mega baccarat andar bahar sbobet88 ktm303 slot dubai slot qris powergaming88 Slot Thailand Slot Zeus Pg Soft Starlight Princess Slot Gacor Maxwin Joker123 Sv388 Slot Thailand Slot Thailand Slot Qris slot thailand joker123 mahjong ways 2 888slot sweet bonanza slot jepang slot thailand slot mahjong ways slot qris slot deposit dana slot dana nolimit city slot thailand sv388 slot888 slot kamboja Slot Thailand Starlight Princess Mahjong Ways 2 Slot Maxwin slot thailand akun pro kamboja slot filipina joker123 slot zeus slot88 slot thailand slot mahjong slot megaways NEW SLOT POLA GACOR Slot Server Luar jp slot slot ganas crazy time live slot qris slot akurat slot bca slot bni qris slot zeus server thailand server hongkong slot ovo slot gopay slot linkaja joker123 nolimit city sv388 starlight princess mahjong ways pg slot slot zeus sv388 idn slot slot server thailand slot thailand ladangtoto nolimit city koi gate sicbo online roulette online lice casino live22 baccarat online nolimit city slot ovo slot gopay pragmati play starlight princess slot pg soft slot mahjong slot zeus sv388 digmaan slot mania slot zeus slot thailand server thailand ying77 slot thailand judi bola live casino sv388 pg soft slot dana mahjong ways slot mania slot x500 ladangtoto slot server kamboja digmaan digmaan slot88 scv388 sabung ayam online slot live casino sicbo online live casino online slot thailand ladangtoto sv388 ladangtoto powergaming88 66kbet powergaming88 slot thailand ladangtoto slot thailand server thailand slot thailand slot thailand slot thailand slot gacor ladangtoto2 ying77 bet server thailand slot thailand ying77 slot88 ladangtoto ladangtoto slot maxwin sv388 sv388 slot gacor 66k bet slot dana sabung ayam inline slot mahjong slot toto slot server thailand slot gacor slot server thailand slot gacor slot thailand situs slot wwg slot slot daftar judi slot online indonesia slot gacor slot mawin slot gacor slot thailand slot gacor slot gacor demo slot pragmatic sv388 slot88 pgsoft Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Daftar Situs Judi Slot Online SLOT88 lucky neko slot gacor slot88 slot kakek slot maxwin slot thailand Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388
Scroll to Top