Half of over 40s expect to pay mortgage in retirement
While people aspire to owning their own home, a significant amount will still be making mortgage repayments (average £514 per month or 47% of retirement income) when they retire.
In addition, with 35% of households in England living in social or private rental accommodation, a number of retirees will need to meet these costs in later life (av. £399 per month or 37% of retirement income).
As people age and either purchase property or repay their mortgage this changes the number who expect to be meeting these costs in retirement but 18% of 66-70 year olds still expect to need to make rental payments and 15% expect to be repaying their mortgage.
In addition to meeting housing costs, these retirees are also likely to be put under financial pressure as they look to meet costs such as council tax (average £115 per month), utilities (average £109 per month) and upkeep of their property (average £66 per month).
Mark Stopard, head of product development at Partnership, said: “Most people aim to own their own home by the time they retire but the trend towards remortgaging, purchasing later in life and being kept off the housing ladder by high house prices means that this is out of reach for almost a third of people.
“This may see some people taking advantage of the opportunity to work longer but for some people – especially those with health issues – this is simply not an option.
“While those in private or social rental accommodation need to focus on securing sufficient income to meet these costs, those who are still repaying their mortgage have more options.
“Either they can use part or all of their pension to repay the borrowing – although this is likely to significantly impact on their later life income – or they can use equity release which can mean they will leave less to their families but face less financial pressure.
“When people consider their retirement, it is vital that they look to reduce their mortgage borrowing as much as possible.
“No one wants to worry about cutting back on essentials such as food and heating to meet housing costs when they should be enjoying retirement.”