The burden of housing costs could drive a growing number of people to put their retirement dreams “on ice”, warns Hargreaves Lansdown.
Latest government data from the English Housing Survey shows 80% of over 75s and 77% of those aged 65-74 were owner-occupiers in 2021/22, but a “considerable” number of households were still repaying a mortgage.
According to the data, 7% of owner occupiers aged 65-74 were making mortgage repayments, along with 2.3% of over-75s. The average mortgage payment for those over 65 is £209 per week.
Meanwhile, over a quarter (25.5%) of all social renters were retired, along with 6.85 of all private renters.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The dream of entering retirement mortgage free remains intact for many but for those who got on the property market late, or not at all, housing costs remain a huge burden. The vast majority of over 65s are owner occupiers but within that there are still significant numbers of households who face having to find a significant chunk of change every month to repay their mortgage.
“At least mortgage holders can envision a time when the loan will be repaid and they can free up the cash for other things. However, for those who rent the obligation is never ending.”
Morrissey said that despite housing costs having a “significant impact” on how much people can save for retirement, they are not often factored into retirement plans. For example, the PLSA’s retirement income standards are modelled on the basis that the mortgage has been repaid.
Morrissey added: “The reality is that if you are paying housing costs in retirement, the amount you need to allow for is much, much higher. In the current times, these issues are particularly acute as mortgage rates and rents continue to surge amid a cost-of-living crisis that has already squeezed every last bit of room from our budgets.
“Recent government data indicated people who retired during the pandemic were considering a return to the workforce – we could see a growing number of them deciding to put their retirement dreams on ice in a bid to make ends meet.”
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