Older renters are heading for a bleak retirement with significantly less financial security than their homeowning peers.

New research reveals that renters expect to retire with £19,000 in annual income - £2,000 less than homeowners - and are also far less likely to have clear financial goals in place.

Pensions consultancy Barnett Waddingham reports that with more than a quarter of over-50s still renting, this is a cohort at serious risk of financial hardship in later life.

The group’s Paul Leandro reckons it’s a ticking pensions timebomb.

“Renters face dual challenges of lower confidence and less engagement with retirement planning, and tangibly worse financial situations,” he said.

Retirement housing costs

Its research found that homeowners are optimistic about their retirement housing costs, with most expecting them to stay the same or decrease, and only 16% anticipating an increase.

In contrast, one-third of renters expect their housing costs to rise during retirement.

“For renters, rising costs threaten long-term stability,” Leandro added. “Bridging this gap requires policies and financial strategies tailored for renters’ evolving needs.”

He wants policymakers to create a better framework that allows someone to save tax efficiently for a house deposit as well as for pension income.

“Alternatively, if there are structural ways - like home equity release - for housing to form part of the retirement framework, then combining the two may be possible. We need direct intervention to protect this at-risk renting cohort.”

A recent analysis of government data by Paragon Bank found that the number of private rented households headed by someone aged between 55 and 64 grew by 66% in the last decade to 492,000.

Those aged 65-plus were the second highest growth group, rising by 33% during the same period to 433,000 households.

Benefits of renting

The NRLA says while households renting in older age may be more exposed to price shocks than those who own their own home outright, there can also be significant benefits to renting on a fixed income as the costs of repairs and general upkeep are borne by the landlord.

A spokesman tells LandlordZONE that although it acknowledges the findings, it should not be assumed that all households have a uniform experience of renting or are facing increasing rents.

He added: "According to our Autumn 2024 Tenant Survey, tenants renting from independent landlords are unlikely to experience annual rent increases. Notably, 35% of these tenants reported never having received a rent increase from their current landlord."

It adds that Government policies should support and encourage the practices of independent landlords who prioritise tenant well-being.

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