The cost of renting a home is upsetting the financial plans of retirement savers who aimed to own their own home.
Pension experts warn that one in eight pensioners will rent their home by 2032 – a massive 300% increase over the current number.
And the cost of renting a private home is likely to cost them £6,000 a year on top of their other retirement bills, says the report from financial firm Scottish Widows.
For many, the only way to afford to rent a home will be to move to a cheaper area, which could be miles away from friends and family.
The company says middle-aged workers are not saving anywhere near enough to cover the costs of renting when they retire.
Paying a landlord will eat up a massive 42% of their retirement income and leave them little else after paying essential bills.
To make up the deficit, the average renter needs to save an extra £525 on top of their usual pension contributions.
But even though they realise they will have to pay rent in retirement, two-thirds of workers aged between 50 and 64 years old have no plans to increase their pension contributions.
Two out of three who would consider paying more into a pension fear they can’t afford to do so without making strict economies or a pay rise.
The report suggests older renters will have to flee London and the South to seek more affordable homes in the North and Wales.
Situation will worsen
Researchers are worried the situation will worsen as more young adults struggle to buy a home
Robert Cochran, a retirement expert at Scottish Widows, said: “Generation Rent is a term often applied to younger generations, but our research shows that the problem extends right to the other end of the generational scale. The number of people renting in retirement is set to treble over the next fifteen years, but alarmingly few people are thinking about how they would cover the growing cost of a property lease when they stop working.
“While some people may choose to rent later in life, we also need to ensure it’s a more sustainable, secure option for an ageing population – many of whom will have no choice. We’re urging the government to consider ways to refine the housing market to better suit older renters – through options such as open-ended tenancy, with predictable rents and protection.”