Approximately six million Britons anticipate still paying off a mortgage or making rent payments in retirement, with a substantial portion of these individuals uncertain about how they will cover these ongoing housing expenses, according to research by Royal London.
One in three adults surveyed believe they will either fall into this category or are already experiencing it. Of this group, two in five stated they do not know how they will manage to continue mortgage or rent payments once they cease working. For those with mortgages, nearly two in five borrowers expect to remain indebted after retirement. Among renters, three in five anticipate paying rent well into their retirement years.
About 45 percent of tenants surveyed said they expected to still be paying rent ten years into retirement, while only 7 percent of mortgage holders anticipated still paying off their home loan within the same timeframe. The research suggests that rising housing costs and extended mortgage terms are leading more people to take on debt later in life. Some individuals are unable to afford to buy a home at all and remain renters.
Individuals who expect to still be paying for their home in retirement reported an average pension pot of £34,948, compared to £120,682 for those confident they will have no housing costs in later life. Nearly three in five people who described their financial situation as a 'financial crisis' believed they would continue paying for accommodation in retirement, contrasting with only 11 percent of those who identified as 'financially comfortable'.
Geographically, those living in London, the South East, and the South were most likely to expect ongoing housing costs in retirement, at 34 percent. In contrast, 23 percent in Yorkshire and the Humber shared this expectation. Notably, 53 percent of people in the North East who anticipate paying housing costs in retirement admitted they did not know how they would afford them, a figure higher than the national average of 39 percent for those with similar concerns.
Sarah Pennells of Royal London commented that for many, the traditional notion of retirement meaning freedom from housing costs is no longer the reality. She highlighted the particular concern that over six million people expecting to pay rent or mortgage costs in retirement are unsure of their ability to cover these payments. Pennells advised that individuals anticipating housing costs in retirement should factor these into their planning as early as possible, as these costs significantly impact the stretch of retirement income.
Nicholas Mendes, mortgage technical manager at John Charcol, attributed the trend to increased difficulty and a later age of entry into home ownership. Higher property prices, rents, larger deposit requirements, and stricter affordability criteria mean many people are buying later, taking out longer mortgage terms, or entering retirement without owning a home. Mendes distinguished between a planned mortgage into retirement, which can be manageable, and one that is a necessity due to extended repayment periods, which can create future problems. While some borrowers with strong pension income, assets, or clear repayment plans may manage mortgages in retirement, the risk lies in the fact that retirement income is typically lower and less flexible than working income. Renting in retirement presents additional challenges due to the absence of a defined end point for payments.
Mendes emphasized that the concern is not just about paying for housing in later life, but also about entering retirement with reduced capacity to absorb financial shocks such as rent increases, mortgage rate changes, illness, care costs, or income reduction.