Millennials who rent for the duration of their career will need to save substantially more to adequately fund their retirement when compared to homeowners, according to a new report. 

Mercer Canada, a global consultancy firm, said in a report Wednesday that renters of millennial age would need to accumulate 50 per cent more in savings to retire comfortably than their home-owning counterparts. 

“Homeowners, in retirement, do not have to pay nearly as much for it. 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 report also found that in order to accumulate “a reasonable income in retirement,” millennials renting over the course of their career would need to save eight times their salary to retire by the age of 68.

“That same millennial, if they own their home, would only need to save 5.25 times their salary – and be able to retire three years earlier, at 65,” the report said. 

Mercer Canada based its analysis on a hypothetical millennial worker with a $60,000 starting salary, who allocates 10 per cent of their monthly salary to a savings plan. 

However, the report noted that 10 per cent savings threshold might be difficult for many millennial workers to achieve. 

Many millennials are having to remain in the rental market “having been permanently locked out” of the housing market, the report said, due mainly to increases in the cost of living coupled with declines in housing affordability.  

“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 down payment or a retirement,” the report said. 


The analysis was conducted using the Mercer Retirement Readiness Barometer, which measures the age at which people can retire based on an employer-sponsored plan and government benefits. The analysis was conducted using Mercer databases and tools. 

The threshold at which a person could retire was defined as having a 75 per cent probability of not running out of funds while accessing 69 per cent of their pre-retirement income.