Older tenants need extra £400,000 in their pension - the risks of renting in retirement
There are financial risks to renting in your golden years, research suggests


Retirement living costs continue to rise, especially if you are still renting a property.
While renting instead of buying a home can provide flexibility, and some may not be able to afford to buy a property due to high house prices, new research highlights the financial risk of being a tenant in your golden years.
The total amount of extra savings needed to rent in retirement over 20 years has increased by £7,000 to £398,000, according to Standard Life.
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The figure, based on an average annual rent increase of 3.7% since 2015, is up from £391,000 in 2024.
It comes after consultancy Barnett Waddingham’s latest At-Retirement Report claims renters have higher expenses, meaning they can save lower amounts into a pension, affecting their retirement income.
Barnett Waddingham warns that while a mortgage is typically repaid by the time someone retires, renting provides an ongoing expense that can even grow.
What are the risks of renting in retirement?
The latest estimates from the Pensions and Lifetime Savings Association suggest that the cost of a comfortable retirement is around £43,900 per year for a single person.
Barnett Waddingham’s analysis found that the expected retirement income for homeowners will already fall short at £21,000 per year, but renters are expecting even less at £19,000 per year – a £2,000 difference.
The survey found that around two-thirds of both homeowners and renters feel they can afford their desired housing costs.
Paul Leandro, partner at Barnett Waddingham, said: “One of the most critical wires in the ticking pensions timebomb is the bleak outcomes for renters in retirement, especially when compared to their homeowning counterparts.
“With more than a quarter of working over 50s still renting, this cohort is at high risk of a difficult later life. The confidence gap stems not just from current homeownership status, but also wider financial planning and awareness.”
When it comes to expected costs in retirement, homeowners are expecting them to stay the same or decrease, while a third of renters expect their housing costs to rise during retirement.
The research also suggests that homeowners are more engaged with their finances and investments than those who rent.
This could be an issue, with data from Standard Life suggesting tenants may need an extra £400,000 from their retirement income to keep up with rising rents compared with homeowners.
There is a regional divide though.
The pension provider’s data shows the southern regions, particularly London and the South East, consistently command the highest rent. In contrast, areas such as the North East, Wales and Northern Ireland offer less expensive rental options.
For example, someone retiring and renting in London would need an extra £833,000, compared with £269,000 in the North East.
Claire Altman, managing director at Standard Life, said: “While saving more for retirement is increasingly essential, regardless of whether someone plans to rent or own, the reality is that for many, homeownership may no longer be feasible. For those who do expect to be renting in retirement, it will be important to start planning how they will meet these housing costs, especially if rent prices continue to increase, as seen in recent years.
“When planning for retirement, its crucial to consider how essential expenses like housing will be covered. If being mortgage-free is not an option, products like annuities, which offer a guaranteed income for life, may help ensure ongoing costs such as rent and essential bills are met.”
The pros and cons of renting in retirement
There can be benefits to renting in retirement.
You may not have to worry about paying for maintenance and it provides more flexibility to relocate more easily, whether to be closer to family, downsize, or move to a more suitable environment as needs change.
However, renting introduces an ongoing monthly expense that can persist indefinitely.
Anita Wright, chartered financial planner at Bolton James, said: “This cost must be factored into retirement income planning. Moreover, rental prices are subject to inflation and market pressures, meaning rents may increase over time, potentially outpacing the growth of retirement income.
“This can place strain on retirees’ finances in the later stages of retirement, especially as other costs – such as healthcare – may also rise.
“For homeowners, selling a property to rent can release capital to bolster retirement savings or fund lifestyle goals, including care needs. While renting can simplify aspects of later life, the recurring and potentially rising cost must be carefully integrated into long-term financial planning.”
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Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.
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