Two in five retirees were forced to sell their homes to pay off debts, 19% needed to release funds in order to cover the cost of a divorce or separation and nearly one in 10 sold their home so they could use the money to boost their retirement income.
Stan Russell, a retirement expert at Prudential, said: “Renting in retirement can make financial sense and accessing property wealth to boost retirement income is a genuine solution for many. Our research shows that many retired renters are perfectly happy with this arrangement.”
But the Prudential study highlighted that moving into rented accommodation comes at a cost. Retired renters pay an average rent of £423 a month, two thirds more than the average mortgage repayment paid by retirees who still have home loans of £257 a month.
For someone retiring in 2013 and paying the average rent, the annual cost of putting a roof over their head will account for nearly a third of the average expected retirement income of £15,300 a year.
Russell said: “Retirees should be aware of the extra financial burden they could be taking on if they choose to sell up and rent. I would urge everyone in the run up to retirement to speak with a financial adviser to help them plan and save for the income they’ll need to cover their costs when they stop working.”
Almost one sixth of retired renters chose not to own their home as a lifestyle choice, 35% rent because they don’t have enough money for a deposit to buy a property and 41% said they could not afford home ownership.
The majority of retired renters, 58%, have never owned a home and nearly three quarters of them, 73%, plan to continue renting for the foreseeable future.
But Russell said the most “concerning”response came from retirees who felt they had no choice but to sell their home to pay off debts.
He said: “The fact that some retirees say they are being forced to sell up purely because they need to pay off debts is concerning and suggests they are not receiving professional advice.
“Organisations like the Money Advice Service and The Citizens Advice Bureau offer free advice and can help enormously in these situations.”
