According to analysis by Standard Life using projected rental costs over 20 years from the Office for National Statistics (ONS), those renting in retirement could need a larger financial cushion depending on where they rent.
The research suggested that renters in Southern regions, particularly London and the South East, will need more than those in areas like the North East, Wales and Northern Ireland.
According to Standard Life, renters in London might need as much as £833,000 saved to afford renting in the capital during retirement, falling to £508,000 in the South East.
Those in the North East will need savings of £269,000.
| Average annual rents across the UK over next 20 years | |||||
| Region | Year one | Year five | Year 10 | Year 20 | Total savings required |
| Average | £13,300 | £15,430 | £18,500 | £26,600 | £398,000 |
| London | £28,000 | £32,200 | £38,700 | £55,700 | £833,000 |
| South East | £17,000 | £19,700 | £23,600 | £34,000 | £508,000 |
| East | £15,200 | £17,600 | £21,100 | £30,400 | £454,000 |
| South West | £14,500 | £16,800 | £20,200 | £29,000 | £434,000 |
| Scotland | £12,500 | £14,400 | £17,300 | £24,800 | £372,000 |
| West Midlands | £11,500 | £13,200 | £15,900 | £22,800 | £342,000 |
| North West | £11,100 | £12,900 | £15,500 | £22,200 | £333,000 |
| East Midlands | £10,900 | £12,600 | £15,000 | £21,700 | £324,000 |
| Northern Ireland | £10,400 | £12,000 | £14,500 | £20,800 | £311,000 |
| Yorkshire and the Humber | £10,200 | £11,700 | £14,000 | £20,300 | £303,000 |
| Wales | £9,900 | £11,400 | £13,700 | £19,700 | £294,000 |
| North East | £9,000 | £10,400 | £12,500 | £18,000 | £269,000 |
This follows recent research by Standard Life, which found that 40% of people want to become homeowners in the future, but due to rising house prices, 12% expect to still be renting when they retire.
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Claire Altman, managing director at Standard Life, part of Phoenix Group, said: “While saving more for retirement is increasingly essential, regardless of whether someone plans to rent or own, the reality is that for many, homeownership may no longer be feasible. For those who do expect to be renting in retirement, it will be important to start planning how they will meet these housing costs, especially if rent prices continue to increase, as seen in recent years.
“When planning for retirement, it’s crucial to consider how essential expenses like housing will be covered. If being mortgage-free is not an option, products like annuities, which offer a guaranteed income for life, may help ensure ongoing costs such as rent and essential bills are met.”
Using pension savings to buy a home
Following discussions around the use of pensions to get onto the housing ladder, Standard Life also recently carried out a study that found that 45% of people were open to the idea. However, a similar proportion – 48% – recognised the long-term financial consequences of doing so. Further, a third said they would be willing to contribute more towards their pension if it meant it would improve their chances of buying a home.
Altman added: “The steady rise in rental costs over the last decade highlights just how important it is for pension savings to keep pace. Financial resilience typically reduces later in life, so having a robust and well-planned income strategy becomes even more important. As the lines between housing and retirement become increasingly intertwined, it’s clear that a holistic approach is needed.
“For some, prioritising homeownership may be a key goal, while for others, focusing on building pension wealth will take precedence. The critical point is that both are long-term financial commitments, which require careful planning. The industry, government and regulators all have a key role to play to support individuals in understanding how housing decisions, whether buying, renting, downsizing or relocating, can impact retirement outcomes.”
