As we have previously reported, the UK is slowly ceasing to become a nation of homeowners, with an increase in amount of people choosing to rent in their retirement.
Figures from the BBC show that over the next 15 years, the number of people renting their home from a private landlord is expected to double to more than nine million. So, how does the land lie for retiree renters?
According to research by Development Economics for Scottish Widow, retirees who don't own their own homes will be paying out an average of 42% of their income in rent within 15 years in the UK.
However, pensioners will face different pressures in different parts of the country, with some areas proving more affordable than others:
- currently, retirees in the capital spend 66% of their income on rent - this could soar by up to 80% by 2032;
- the next most expensive area for retired renters will be the East of England, where the figure could be 45%;
- retired renters in Wales and the North East will spend almost half that amount (24% and 25% respectively) on accommodation;
- in the South East, retirees can expect to spend 39% of their pension income on rent.
So, the feasibility of being a retired renter depends very much on the cost of local rents, and whether you would consider moving to a cheaper area.
The study also highlighted that:
- currently, 32% of the average pensioner household's monthly income of £2,374 is spent on rent;
- within 6 years, the average pensioner income will have risen to £3,706 - but rents will have risen faster, accounting for 42% of income.
This suggests that those planning to rent in retirement should consider saving more while they are working. Scottish Widows believes the average renter planning to retire in 15 years' time needs to save £525 a month more than they are saving at the moment. Or alternatively, work for an extra five years.