Royal London research reveals a £85,000 pension gap between those who will and won't carry housing costs into retirement
Six million UK adults don’t know how they’ll cover their housing costs in retirement, according to new Royal London research.
The study found around one in three UK adults (18.7 million people) either carry housing costs into retirement or expect to. Of those 16 million who anticipate those costs, four in ten have no plan for funding them.
That gap is the client conversation brokers are best placed to have at every remortgage, renewal, or term extension.
What do retirement housing costs mean for your clients?
Six in ten renters (61%) expect housing costs in retirement against 37% of mortgage borrowers. Nearly half of renters (45%) expect to still be paying rent more than a decade after they stop working.
Those expecting retirement housing costs hold an average pension pot of £34,948, against £120,682 among those who don’t. Housing debt and retirement underprepedness, the data suggests, are the same problem.
Younger borrowers carry a share of that risk. More than four in ten adults aged 18 to 34 (44%) anticipate retirement housing costs, against 24% of those aged 50 to 69. Some 43% of that younger cohort took mortgages with original terms of 35 years or more. This is a pattern reflected in rising figures for borrowers carrying mortgage debt into retirement.
How brokers can use retirement housing cost data
The data points to a client need that arises at every stage of the mortgage journey, not just origination.
A 35-year-old who took a 35-year mortgage in 2020 will not finish repaying it until they are 70. At every remortgage, a broker who raises the question of retirement affordability is providing a service most clients won’t receive elsewhere.
Sarah Pennells, consumer finance specialist at Royal London, said: “Housing costs can make a huge difference to how far retirement income will stretch. Understanding what your housing costs could look like in later life can help you develop a more realistic picture of the income you’ll need in retirement.”
For clients in or near retirement, the product range has widened. Brokers with working knowledge of retirement interest-only mortgages, lifetime mortgages, and equity release can serve borrowers that mainstream lenders have struggled to accommodate.
A practical overview of how those conversations are developing is available in this guide to how brokers are navigating later life lending.
Retirement housing costs by region: where the gaps are widest
The risk is not evenly distributed. In London, the South East, and the South of England, 34% of adults expect to be paying rent or a mortgage in retirement. In Yorkshire and the Humber, that figure is 23%.
In the North East, 53% of those who expect retirement housing costs say they don’t know how they’ll fund them. This figure is well above the UK average of 39%.
At the lower end of the income spectrum, pressure is steepest. Some 59% of those in financial crisis expect retirement housing costs, against 11% of those who describe themselves as financially comfortable.
Why raising retirement housing costs early is core broker practice
As mortgage terms lengthen and retirement ages shift, the boundary between mortgage advice and retirement income planning has become harder to maintain. Clients who appear to be managing fine today may already be on a trajectory that leaves them paying housing costs well into their 70s.
Royal London’s findings don’t ask brokers to become retirement specialists. They make a simpler case: raising housing costs as a retirement planning question – at renewal, at remortgage, or whenever terms are extended – is part of responsible client service.
