If millennials rent throughout their working lives, then they must save a lot more than homeowners in order to retire in their 60s. Read on.
“This is a generation where being able to retire is one of the top three challenges when we look at unmet needs,” Jillian Kennedy, prents
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.
Saving eight times one’s salary is “probably not” achievable, Kennedy acknowledged. “If you take a look at the difference, it’s safer to say the homeowner in retirement is going to have better quality of life and a much lower likelihood of running out of assets.” Mercer defines retirement readiness as a 75 per cent probability of having enough money to last until death. That equates to 66 per cent of pre-retirement income maintained while retired, including government benefits, for a boomer, and 69 per cent for a millennial.
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