The Daily Telegraph - Saturday - Money
‘Airbnb is saving my retirement’
Home-owners moving closer to retirement are turning to short-term renting as pension pots fall short, writes Ruby Hinchliffe
HA 54-year-old freelance bookkeeper in south Devon ‘A lot of my friends do the same. The income funds my holidays’ ‘Without it, we wouldn’t be able two do things in retirement’
omeowners are increasingly turning to Airbnb in order to foot shortfalls in their retirement savings. Those in their late 40s and early 50s currently face an average savings shortfall of around £160,000 if they want to enjoy a moderate retirement, according to insurer Phoenix.
A moderate annual retirement income in the UK was recently reclassified, with the goalposts now between £ 31,300 and £ 43,100 – depending on whether you’re single or married.
One way midlifers are trying to make sure they fall between them is by letting out a room in their homes. Booking portal Airbnb says nearly a third of its UK-based hosts are retired, with hosts over 50 now making up 42pc of all hosts on its platform – up from 37pc five years ago.
The proportion of hosts over 60 has also increased over the same period, from 15pc to 19.2pc – and the holiday let portal also counts 7.5pc more retired hosts since 2019.
Patrick Thomson, of Phoenix, says midlifers are among “the least financially prepared”.
He adds: “They have typically missed out on final salary pensions and also the introduction of a lifetime of workplace pension saving through auto- enrolment.
“Some are looking to save more where they can, from spending less on holidays and luxuries items to renting out a spare room. But a significant group is still at risk of sleepwalking into retirement without sufficient savings to fund it.”
The Telegraph recently looked into the cost of Britain’s state pension, currently worth £203.85 per week. The Office for Budget Responsibility predicts that by 2027- 28, the Government will be spending an extra £23bn on the state pension compared with the start of the 2020s.
This has prompted warnings from the Institute for Fiscal Studies that while sustainable for now – the state pension might not be sustainable for much longer.
‘ALL MY FRIENDS DO IT’
Liz Matthews, of south Devon, is a 54- year- old freelance bookkeeper who earns £ 32,000 a year. She isn’t sure when she will retire, but after divorce five years ago she realised the onus was on her to ensure her savings were up to scratch.
In 2022, her youngest son disappeared to university. It was then that Matthews started to let out his room, which helpfully has its own private entrance. She makes an extra £10,000 each year. The four- bedroom family home in Kingsbridge is 15 minutes from a lot of beaches and just half an hour away from Dartmoor.
Matthews says: “A lot of my friends do the same. One has a basement flat in her five-bedroom house.
“Hers is even busier than mine, but she’s not working so she’s got more time to do the changeover between bookings. The extra income funds my holidays and the running of the house – but I am also trying to save as much as possible for retirement. The house is for a family, so I might as well make use of it.”
In the next five to 10 years, Matthews intends to downsize to a two-bedroom flat. But for now, she wants to keep the home her children grew up in so she can still host them and their families when they come to visit. The Government’s Rent a Room scheme allows homeowners to profit from up to £7,500 in rental income before having to pay any tax on earnings. For Matthews, this means she pays 20pc tax on £ 2,500 in earnings – equivalent to £500 each year.
The mother of two says: “The threshold makes it appealing too, because I don’t have to pay too much in tax on my earnings.”
‘ I ONLY HAVE A SMALL PENSION’ Samantha Andrews, 56, had never even thought about Airbnb. She retired early in 2017, aged just 49.
Her husband is nine years older and was ready to enjoy the fruits of decades in the workforce. “He didn’t want to retire on his own,” she says. Not long after she quit her job as a manager of a college, she was diagnosed with breast cancer. “They were trialling younger people for a mammogram. I would never have known if I hadn’t retired early.”
What ensued was a year of treatment followed by recovery. Andrews and her husband have a big garden, so they decided to build a glamping pod. Initially, Andrews used it to rest and recuperate in.
But before long, the two realised its business potential. Now, the pod – which is Hobbit-themed – turns over £ 2,000 a month for half the year, from April to September.
Even now Andrews can draw on her private pension, the supplementary income still feels essential.
Her teacher’s pension is about £5,000 a year, equal to around £100 per week.
The Airbnb pays for her home insurance, her car insurance, Christmases, and the couple’s oil-fuel boiler.
“Without it that would be really tight. I wouldn’t be able to do things in retirement. We have a motor home which it pays for too and that allows us to go away for a few weeks after summer is over.
“It’s also a stream of income which will be mine in the future and gives me my independence,” she says.