The industry, government, and regulators must play a key role in helping people understand how housing decisions affect retirement outcomes, Standard Life has said, after its research found renters may need an extra £398,000 in retirement than those without housing costs.

This marks a £7,000 rise from last year's figure of £391,000, underscoring the long-term financial impact of starting retirement as a renter.

Standard Life noted that while rental increases can fluctuate based on supply, inflation, and interest rates, there are significant regional disparities in rental costs.

For example, the southern regions, including London and the South East, experience the highest rental costs, whereas places such as the North East, Wales, and Northern Ireland provide more affordable rental choices.

Standard Life said renting in high-cost areas such as London could require significantly more savings or pension income compared to more affordable regions.

Additionally, the firm’s research on property and pensions showed that homeownership remains a key goal for some, with 40 per cent of people planning to buy a property in the future.

However, increasing house prices present a challenge, as data from the Office for National Statistics revealed that the average house prices in the UK increased by 6.4 per cent in the past year, suggesting that home ownership may still be unattainable for many.

Supporting this, Standard Life’s Retirement Voice report found that 12 per cent of adults expect to still be renting when they retire.

Standard Life managing director, Claire Altman, 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.”

Altman emphasised the importance of accounting for essential expenses, like housing, when planning for retirement.

She pointed out that the consistent increase in rental prices over the past 10 years underscored the necessity of 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,” she stated.

Standard Life also highlighted the recent debate around the possibility of allowing early access to pension savings for house deposits.

While many individuals are attracted to the concept of utilising pension savings to help buy a house, Standard Life said there is a strong awareness of the financial risks this could present over the long term.

Indeed, 45 per cent of adults support the idea of accessing pension savings early to get on the property ladder, but 48 per cent acknowledge the long-term financial consequences of doing so.

In addition to this, one in three said they would be willing to increase pension contributions if it meant improving their chances of buying a home, underscoring a willingness to balance short-term goals with long-term financial security.

Altman noted that as the lines between housing and retirement become “increasingly intertwined”, it’s “clear” that a holistic approach is needed.

She said this may mean homeownership as a goal for some, while others might focus on building pension wealth, but emphasised that 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,” she said.

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