Millennials who don’t own property will need 50% more savings than homeowners to be able to retire comfortably.
A new report by consultancy firm Mercer says homeownership gives Millennials, those born between 1981 and 1996, a significant advantage when it comes to retirement.
The analysis, which was conducted in Canada but can be extrapolated to Australia, assumes that the millennial has an AUD$66,000 income and puts 10% of their monthly salary into savings.
It worked on the basis that to be ready for retirement Millennials needed a 75% probability of not running out of money before death.
The results show home-owning Millennials need to save only 5.25 times of their salary to be able to retire at age 65, but renters need to save eight times their salary to be financially ready and retire at 68 years old.
The report says retired homeowners do not have the same costs of living as most renters do.
“Homeownership also gives retirees flexibility, as retirees who downsize may be able to access a significant amount of money. Renters, conversely, must pay rent every month or face eviction — whether they are 25 years old or 85 years old,” the report says.
