Its analysis revealed that 34% of adults – equivalent to 18.7 million people – either expect to pay for housing when they retire or are already doing so.
But of that number, 39% – or 16 million – do not know how they will bear these costs when they stop working.
It’s renters who face the biggest challenge, but up to 7% of mortgage holders expect to make repayments more than 10 years after they retire.
The findings come at a time when rising housing costs and longer mortgage terms mean that more people are likely to enter retirement still paying for a roof over their heads.
The researchers found that younger adults are particularly affected, with 44% of those aged 18-34 expecting to bear housing costs in retirement, compared to 24% of those aged 50-69.
On average, homebuyers between the ages of 18 and 34 have an original mortgage term of 31 years, and 43% of them have taken out a mortgage with an original term of 35 years or more. By comparison, only 2% of retirees originally had their mortgage last for 35 years or more.
How will this affect retirement savings?
It has raised concerns about people’s ability to save for retirement and build long-term financial resilience.
Royal London found that those who expect to pay for housing in retirement have an average pension of £34,948, compared with £120,682 among those who do not. The average pension savings across all participants was £93,221.
In which locations are retirees most likely to pay a mortgage?
Where you live can also make a difference, with people living in London, the south-east and the south of England, among those most likely to expect housing costs in retirement. In fact, 34% told Royal London that they expect to continue paying their rent or mortgage after they retire. This compares to 23% in Yorkshire and the Humber.
Meanwhile, more than half (53%) of people in the north-east of England who expect to afford housing in retirement say they don’t know how they will pay for it, significantly higher than the UK average of 39%.
“For generations, reaching retirement has often meant getting to the point where housing costs are behind you,” said Sarah Pennells, consumer finance specialist at Royal London. “But for millions of retirees today and those of tomorrow, that is simply not the reality.”
She added: “If you are heading towards retirement and expect to have housing costs, it is important to take them into account when planning to retire as soon as possible.
“Housing costs can make a big difference in how far your retirement income will stretch. Understanding what housing costs can look like later in life can help you get a more realistic picture of the income you will need in retirement.”
