A staggering long-term cost of renting in retirement has been revealed by new data. Retirees’ rents are expected to more than double over the next 20 years, taking the total cost to around £419,000, Standard Life research suggests. For a “minimum lifestyle” in retirement a single person needs an income of £13,900, but that assumes housing costs are covered, experts say.
They add that retirees who rent their home could need an additional £13,910 a year to cover housing costs in 2027, doubling income needed for a “minimum standard of living” in retirement. Costs vary across the UK, Standard Life says. In London, for example, retirees would need an extra £28,520, meaning rental costs over £800,000 over a 20-year retirement. The firm’s research also suggests that one in three pensioner households could be renting in retirement by 2044.
Pete Cowell, Head of Annuities at Standard Life, said: “Housing costs don’t stop at retirement, and renters face a very different reality to that of homeowners.
“For a growing number of people, housing costs could be the single biggest expense they face in later life, adding many thousands of pounds a year to the income needed to maintain a minimum standard of living. While support is available for those on the lowest incomes, many retirees will still need to plan for how ongoing housing costs will be met over the long term.
“As renting in later life becomes more common, planning how those costs will be met is likely to become one of the most important financial decisions people make. Whether through savings, guaranteed retirement income products or a combination of both, having a clear plan for meeting those costs can make a significant difference to long-term financial security.”
Catherine Foot, Director of the Standard Life Centre for the Future of Retirement, said: “Renting in retirement is set to become far more common in the years ahead. That exposes a fundamental flaw in our current pension system, which is built on the assumption that housing costs fall in later life. With a quarter of 60–65-year-olds already living in poverty, a rise in renting risks pushing even more retirees into financial difficulty.
“As the Second Pensions Commission considers the long-term future of pensions, it must reflect the financial realities today’s and future retirees face. Its recommendations will shape the system for decades to come, it’s vital that it results in tangible measures that build people’s financial resilience and support better long-term outcomes.”
Average annual rents across the UK (2026-2046), based on average life expectancy in retirement of 20 years and projected 3.8% annual rent increase
This story originally appeared on Express.co.uk
