People who expect to rent during retirement could need an additional £398,000 in savings compared to those with no housing costs.

The figure has increased by £7,000 from £391,000 in 2024, according to Standard Life’s Retirement Voice.

The company’s research on property and pensions showed that homeownership remains a key goal, with 40% of people planning to buy a property in the future. However, rising house prices continues to post a challenge.

The latest ONS data shows that average UK house prices rose 6.4% over the past year, reaching £271,000 in March, and for many, owning a home may remain out of reach.

They also revealed that more than one-in-ten (12%) of adults expect to still be renting when they retire.

There are clear regional disparities, according to the firm’s analysis. The southern regions, particularly London and the South East, consistently command the highest rent.

In contrast, areas such as the North East, Wales and Northern Ireland offer less expensive rental options, highlighting a regional divide when it comes to housing costs.
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.”

She said when planning for retirement, its crucial to consider how essential expenses like housing will be covered. “If being mortgage-free is not an option, products like annuities may help ensure ongoing costs such as rent and essential bills are met.”

• Standard Life’s analysis used ONS data to project rental costs over a 20-year retirement period, based on an average annual rent increase of 3.7% since 2015.