Older tenants have a ‘pension mountain’ to climb

Tenants who will have to keep renting after they retire will have a ‘pension mountain’ to climb if they want to maintain their standard of living.

Analysis by Royal London revealed that older renters from private landlords need to accumulate a pension pot of as much as £445,000 if they want to carry on living the good life after they retire.


The investigation was undertaken after middle-aged renters started to express concern that they were facing the prospect of having to work longer to be able to afford their rent.

The report also uncovered a massive difference in the amount needed between renters and home owners.

Full amount

For tenants the full amount of their rent will have to be factored into their financial planning for their retirement years.  They need to consider now how much extra they will have to save to meet their housing costs when their retirement date comes around.

But, if you are a home owner, analysts believe the size of the pension pot could be almost halved to £260,000.


That figure assumes people will stop working at 65, that they will use their pension pot to buy an annuity which will give them an income for the rest of their life and that they will have a full state pension to top up their income every month.

But the most important thing is the difference in on-going housing costs.  If they have paid off their mortgage, housing costs will be reduced to maintenance only with no significant monthly outgoing.

Private v Social

The type of rent you are paying is also a factor as renting from a private landlord is more expensive than living in social housing.

Social tenants – with either a council or a housing association – were paying £4,455 a year in 2015-16, but anyone with a private landlord was forking out more than £2,000 a year more at £6,554.


The report concludes that the best plan is to build up a larger pension pot to ensure you are better placed to meet the challenges of older age.

Improving the level of auto enrolment in a pension with more self-employed and lower income people starting to save earlier is one step with the other being increased contribution rates with default step-ups as people get pay rises.

Bigger pot

Royal London’s Helen Morrissey said: “If our retirement pot is going to support us through a longer retirement and in an era of lower interest rates, we are going to need to build a much bigger pot than in the past.

“More worrying still, we can no longer assume that we will be mortgage-free homeowners in retirement. For those unable to get on the property ladder during their working life, a large private rental bill needs to be factored in to retirement planning.”