The hidden cost of renting in retirement: a £419,000 challenge

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Rents are expected to more than double over the next 20 years, taking the total cost of renting in retirement to around £419,000, according to our recent analysis.  This is set to place significant pressure on retirement incomes, with renters facing materially higher financial requirements than those who own their homes outright.

The analysis is based on Office for National Statistics private rental data. It assumes no housing support and annual rent growth of 3.8%^*. It suggests average monthly rents could rise from £1,160 today to around £2,350 by 2046.

Why renters need a larger retirement income

According to the Pensions UK Retirement Living Standards, for a minimum lifestyle in retirement a single person needs an income of £13,900 a year, rising to £32,700 for a moderate lifestyle. However, these figures assume housing costs are already covered. For those who rent in retirement, housing costs could add the equivalent of around £13,910 over the next twelve months, increasing the income needed to achieve a minimum living standard from £13,900 to £27,810.

^{Figures are based on average life expectancy in retirement of 20 years and projected 3.8% annual rent increase}
 

The UK’s retirement postcode lottery

Retirement rental costs vary significantly across the UK. In London, retirees could face rental costs over £800,000 over a 20-year retirement. In the South East, total costs are expected to reach £531,000, and in the East around £480,000. 

Even in regions with lower starting rents, costs remain significant, with retirees in Scotland facing costs of around £382,000, and those in the North East, around £291,000. This variation highlights how both housing and location are becoming increasingly important considerations in retirement planning.

Planning for housing costs in later life

As renting in later life becomes more common, planning how housing 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.

A generation of retirees facing ongoing housing costs

The UK retirement system has largely been built around home ownership. Retirement Voice 2025 found that 82% of current retirees own their home outright, significantly reducing their living costs. 

However, the Pensions Commission^** recently highlighted that the proportion of households renting privately has more than doubled over the past two decades, with more people likely to enter retirement with ongoing housing costs. This is also reflected in research from the ABI which found that one in three pensioner households could be renting by 2044.^***
 

Is the retirement system keeping pace?

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.

Sources:
^*Figures are based on an average retirement period of 20 years and assume annual rent increases of 3.8%, estimated using monthly private rental data from the Office for National Statistics (UK private rent and house prices, May 2026). 
Figures are rounded and assume no housing support or subsidy. Actual costs will vary depending on individual circumstances, inflation, and the type of housing, with costs likely to be lower for those renting through housing associations or receiving support towards housing. These figures are intended to illustrate the potential scale of rental costs in retirement and are not a calculation of the pension pot required to secure a specific level of guaranteed income.
^**The Pensions Commission - GOV.UK
^***Retirement Adequacy, Housing and Pension Saving | PPI