Around six million Britons do not know how they will fund housing in retirement, according to new figures from pension provider Royal London.
Roughly one in three UK adults currently believe they will fall or have already fallen into the category of paying a mortgage or making monthly rent payments after leaving the workforce. Of those facing ongoing accommodation costs, two in five said they have no plan for how they will manage payments once they stop working.
The survey by Royal London, the UK's largest mutual life and pensions company, shows that nearly two in five existing mortgage borrowers will not clear their home loans before retiring. Among private tenants, three in five expect to continue paying rent throughout their retirement years.
Long-term projections indicate that housing costs will persist well into later life for many households. About 45 per cent of tenants expect to still be paying rent a decade after retiring. By contrast, only seven per cent of mortgage holders expect to be paying off a home loan ten years into retirement.
The pension savings gap
The data reveals a stark divide in pension accumulation between those who will own their homes outright and those facing ongoing housing expenses. Royal London found that respondents who expect to pay for housing in retirement have an average pension pot of £34,948.
In comparison, individuals who are confident they will have no mortgage or rent obligations in later life hold an average pension balance of £120,682. That leaves those with ongoing housing bills facing a gap of more than £85,000 in retirement savings.
Personal financial stability also strongly correlates with expectations around housing costs. Nearly three in five survey respondents who described themselves as being in a "financial crisis" said they thought they would continue paying for accommodation during retirement. Among those who identified as "financially comfortable," only 11 per cent expected to pay rent or a mortgage in later life.
Regional divides across Britain
Expectations vary significantly depending on where households are located across the country. Residents in London, the South East and the South of England recorded the highest rate, with 34 per cent expecting to pay a mortgage or rent in retirement.
At the opposite end of the spectrum, 23 per cent of people in Yorkshire and the Humber expect to still be paying a mortgage or rent in later life. Regional differences are also evident in financial confidence among affected residents.
In the North East, 53 per cent of those who expect to pay for housing in retirement admitted they do not know how they will afford those payments. Across Britain as a whole, the proportion of people sharing that concern stands at 39 per cent.
Changing routes to home ownership
Addressing the findings, Sarah Pennells, consumer finance specialist at Royal London, highlighted how dramatically retirement dynamics have shifted. "For generations, reaching retirement often meant reaching the point where housing costs were behind you," Pennells said. "But for millions of today's retirees and future retirees, that simply isn't the reality."
Pennells stressed the necessity of early financial planning for those facing ongoing property expenses. "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," she noted. "If you're heading towards retirement and expect to have housing costs, it's important to factor these into your retirement planning as early as possible."
"Housing costs can make a huge difference to how far retirement income will stretch," Pennells added. "Understanding what your housing costs could look like in later life can help you develop a more realistic picture of the income you'll need in retirement."
Longer mortgage terms and affordability pressures
Industry experts note that buyers are entering the property market later in life due to high property prices and elevated borrowing costs. To manage monthly affordability, many buyers take out extended home loans lasting 35 or 40 years, while others remain in the private rented sector indefinitely.
Royal London pointed out: "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."
Nicholas Mendes, mortgage technical manager at broker firm John Charcol, said the route into home ownership has become "harder and later."
"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," Mendes explained.
Mendes noted a distinct difference between planned borrowing in later life and involuntary debt. "There is a difference between a mortgage running into retirement as part of a planned strategy and someone being pushed into it because the monthly payments only work over 35 or 40 years," he said. "The first can be perfectly manageable. The second can store up problems for later."
Risks facing renters and borrowers
For some home buyers, carrying a mortgage into retirement is manageable if supported by substantial pension income, other assets, or a structured repayment strategy. However, pension income is typically lower and less flexible than employment wages, making payments that were comfortable during working years harder to maintain.
Renting during retirement presents even greater long-term challenges because rental payments never end. Unlike a fixed mortgage term that eventually concludes, tenant obligations continue indefinitely and remain exposed to ongoing market rent increases.
Mendes warned that many retirees are becoming increasingly vulnerable to financial disruptions. "The concern is not simply that people are still paying for housing in later life," he said. "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."
Broader mortgage market environment
The retirement figures arrive amid broader pressures across the UK home lending market. Five major lenders recently raised interest rates on their mortgage products following volatility in the bond market.
Mortgage rates have increased again as inflation, driven in part by international conflict with Iran, reduced expectations that the Bank of England would implement prompt interest rate cuts. Consequently, homeowners seeking to remortgage and new property buyers face higher monthly borrowing costs.
