Renters aged 50 plus are not saving nearly enough to cover their rental costs in retirement, leaving a £43bn shortfall, a Scottish Widows report has claimed.
According to research from Scottish Widows renters aged 50 plus need to save more than £6,000 extra each year to cover the growing rental costs in retirement.
The firm predicts one in eight retirees will be living in rental accommodation in 15 years, treble the current number, while 42 per cent of their average retirement income will be spent on rent.
The provider stated the average renter planning to retire in 15 years’ time would need to save an additional £525 each month into their pension – £6,300 a year – on top of their pension contributions or alternatively, work for an additional 5.1 years to cover growing rental costs in retirement.
Despite this, more than two thirds (67 per cent) of 50 to 64-year-olds planning to rent in retirement have no plans to increase their pension contributions to cover the shortfall, Scottish Widows warned.
About two-thirds of those prepared to raise their contribution told the firm they could not afford to do so without a pay rise or significant compromise elsewhere.
Scottish Widows interviewed about 4,100 people between 12 and 16 October as part of its retirement report series.
Robert Cochran, 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 15 years, but alarmingly few people are thinking about how they would cover the growing cost of a property lease when they stop working.
“We are 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.”
The problem appears to be countrywide, Scottish Widows said, but certain regions are still expected to be hit disproportionately hard.
In the south pressure to rent is expected to spread from London to the south east and east of England while northern regions and Wales are expected to remain the most affordable, according to the provider.
Renters are also considering relocating for cheaper rent with almost four in 10 (39 per cent) people being open to the idea, increasing to 65 per cent in London, where rental prices continue to skyrocket.
Scottish Widows warned the situation was set to worsen as fewer people manage to get onto the property ladder.
More than a quarter (27 per cent) of renters aged less than 45 told the provider they would probably never be in a position to buy a property while others anticipated they would still be paying off their mortgage well into their retirement.
Dan Wilson Craw, director of campaign group Generation Rent, said: “The government will be in for a nasty shock as more of us retire and continue to rent from a private landlord.