Millions of Britons anticipate still paying rent or a mortgage in retirement, with a substantial number unsure how they will manage these costs, according to research by Royal London.
Approximately one in three adults believe they will be in this situation or already are. Of this group, two in five stated they do not know how they will cover housing expenses after they stop working. In total, an estimated six million individuals expressed uncertainty about funding their housing costs in later life.
The study found that nearly two in five mortgage holders expect to be making payments beyond retirement age, while three in five tenants surveyed anticipate still paying rent. Around 45% of tenants believe they will still be renting a decade into retirement, compared to just 7% of mortgage holders who expect to still be paying off their home loan in the same timeframe.
This trend is attributed to rising housing costs and longer mortgage terms, leading people to enter the property market later in life or to continue renting. "The findings come as rising housing costs and longer mortgage terms mean more people are likely to enter retirement still paying for a roof over their head," Royal London stated.
Individuals expecting to pay for housing in retirement reported an average pension pot of £34,948, significantly lower than the £120,682 average held by those confident they will be mortgage or rent-free in later life. Nearly three in five people who described their financial situation as a 'crisis' believed they would continue paying for accommodation in retirement, in contrast to only 11% of those who identified as 'financially comfortable'.
Geographically, residents in London, the South East, and the South were most likely to expect ongoing housing costs in retirement, at 34%. At the other end of the spectrum, 23% in Yorkshire and the Humber held similar expectations. Notably, 53% of those in the North East who anticipate paying housing costs in retirement admitted they do not know how they will afford them, compared to an average of 39% across Britain.
Sarah Pennells of Royal London commented, "For generations, reaching retirement often meant reaching the point where housing costs were behind you. But for millions of today's retirees and future retirees, that simply isn't the reality." She added, "What's particularly worrying is that over six million people who expect to pay rent or mortgage costs in retirement don't know how they'll cover those payments."
Nicholas Mends, mortgage technical manager at John Charcol, explained that the path to home ownership has become more difficult and delayed. "Higher house prices, higher rents, larger deposits, and tighter affordability mean many people are buying later, taking longer mortgage terms, or reaching retirement without owning at all," he said. Mends cautioned that while a mortgage extending into retirement can be manageable with a clear repayment plan and sufficient income, it poses a greater risk when retirement income is lower and less flexible than working income. Renting in retirement presents additional challenges due to the absence of an endpoint, unlike a mortgage. "The concern is not simply that people are still paying for housing in later life. It is that more people may be entering retirement with less room for shocks, whether that is rent increases, mortgage rate changes, illness, care costs, or a drop in income," Mends stated.