Renters in old age 'may need pension pot of £445,000'

Young people who never get on the housing ladder could end up needing a pension pot worth as much as £445,000 to be comfortable in retirement, according to a new paper by Royal London titled 'Will we ever summit the Pensions Mountain?'. The document stated that the average size of pot needed to prevent an uncomfortable retirement has increased in real terms by three-quarters since 2002 to £260,000, but will be higher still for those who do not own their homes outright. 

The basic working assumption for the paper is that a retired person can live comfortably on two-thirds of their working age income provided they no longer have to deal with costs such as mortgages or season tickets for travel. However, it noted that for many this will not be the case. 

Personal Finance Specialist at Royal London Helen Morrissey said the research showed how the size of pension pots is clearly a "moving target". She added, "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."