They will have to save an almost unachievable amount compared with their peers who own a home, study says
Published Apr 13, 2023
Owning a home could make all the difference between millennials having enough money to retire or being forced to work longer than their parents did.
If millennials — who today are in their late 20s to early 40s — rent throughout their working lives, then they must save a lot more than homeowners in order to retire in their 60s, according to the 2023 Mercer Retirement Readiness Barometer.“This is a generation where being able to retire is one of the top three challenges when we look at unmet needs,” Jillian Kennedy, partner and leader of defined contribution and financial wellness at Mercer Canada, said April 12.
Mercer estimated that a millennial who rents would need to save eight times their salary over the course of their career to be able to retire at age 68. Meanwhile, peers who own a home would need to set aside 5.25 times their salary and would be “retirement ready” at age 65. To arrive at the savings rates, Mercer assumed a starting salary of $60,000 and contributions of 10 per cent of salary per month to a savings plan starting at age 25.