Renting when retired

[Blackbirdsinthgarden]

I DO know some people have no choice whether or not to rent in retirement but would be interested to hear other peoples views. I was out at a social occasion a few nights ago with my friends, their grandmother, three adult young men, mid 30’s, their partners and 4 children. During the meal two of the young men (brothers) got into a heated discussion with their cousin (a young man of a similar age, with his partner - no children). The cousin and his partner were renting a property but were saving very hard for a deposit to buy a property. His cousins (both on decent salaries) both rent and guffawed the cousin and his partner for wanting to buy their own property. They laughed and said it “was a fools game”. Both had no intention of buying their own property and told said cousin they could rent a better house in a better location rather than buy. The cousin’s view was that, if he and his partner bought in a less desirable area, they may eventually move up the housing ladder and eventually own their own home and be mortgage free in retirement.

My own young adult children made sacrifices to buy and now have a mortgage on a property which they like, but not their dream home, so I was on the side of the cousin. The two brothers earn more than the cousin and have been offered help by their parents and grandmother for a deposit, but have refused, saying that, when they retire, the State/Government will pay for their rent through housing benefit. They told the parents/grandmother that they would still welcome the money though to go on holiday! (Which was refused, by the way!).

I was taken aback and before the discussion got too heated, the topic was soon changed and we enjoyed the rest of the evening, albeit with a bit of tension in the air.

Am I being unreasonable to think that the two brothers should have welcomed money towards a deposit and that they were being naive/arrogant to think that the State will fund their housing in retirement? They both, as reasonable earners, rent quite comfortably and prioritise expensive holidays/cars over everything else. Will the Government still be able to fund their housing in retirement? Apart from the State Pension, they said they have little private pension (a mug’s game apparently!) and that they would be entitled to pension credit.

Apologies for the rant but I feel they are quite blinkered! Who knows what benefits will be available in 30+ years time (if any). I know that some people will have no choice to rent in retirement, but at their age I would have bitten my family’s hand off!!!

Don't most people choose to downsize when they retire to more suitable accommodation?

Not necessarily. For most people the grandchildren come along and having the space/extra bedroom(s), garden etc is a godsend

I have no plans to downsize (am semi retired) unless I am forced to for financial reasons

They're living in a dream world if they think the state in the future will provide sufficient to rent and a good standard of living while keeping up with inflation.
They've obviously made a conscious decision to live for now and not secure their retirement.
The burden of pensions on the state worries many in government that's why contributions from salary are compulsory unless you opt out.
I suspect in the future if you opt out then you will be left to paddle your own canoe.
I would tend to agree with the relative who strives for property ownership. At least then you're not lumbered with rent consuming your pension payments in retirement.
Whilst property ownership is not essential, saving and planning retirement is unless you want to work forever or enjoy your old age broke.

My grandparents are retired and they live in a 2 bed housing association house with a little garden.

My grandparents are retired and they live in a 2 bed housing association house with a little garden.

After decades of lack of new housing stock for state/housing association rental the chances of securing something like that will be akin to finding rocking horse poo pretty soon

I'm laughing at the idea that everyone downsizes in retirement. Every single retired couple (and a widower) in my family is still in the family home in their early 70s, except my in-laws who "downsized" from a 5 bed detached with 1 acre into a 5 bed semi in the most expensive town in their county.

If we stay in our terrace we will be mortgage free by 50 and it is absolutely the first thing we prioritise, money-wise. If we need somewhere better for mobility later in life I want to be able to sell and move into a bungalow I've chosen!

Maybe it's an American thing. Property taxes are very high and based on the size/value of the home. Most people don't want to spend extra thousands in tax for no good reason.

If you are fortunate enough to have an assured tenancy in a social housing property, then retirement is not all doom and gloom when you dont have a private pension.
My DM lives in a HA property on a state pension. She will say she is financially better off than she can ever remember being. Her rent & council tax are paid in full via benefits, no reduction in benefit for having a larger property (bedroom tax), it's all covered and she doesnt have to worry about maintaining her property.
OTOH, MIL bought her house and is also on a state pension. MIL struggles financially and her house is now in a bad state of disrepair. In order to get some of the repairs done, she released equity from the house, since she had no way of repaying a mortgage of any size while she is alive. Now her house is in a bad state of disrepair and she cant release any more equity, she's had it all and her standard of living is really rather grim.
If I had to choose, I know which situation I'd rather be in.

The government will help you with the very basics but you won't get choice, you won't be able to have savings to qualify, and you will have a very low standard of living. Their choice but not mine

Some people do move from say a £400k to a £150k to use the equity as a pension but lots of people just do equity release remortgages at low interest rates so they don't have to move.

Do the brothers have partners or was it just the cousin with a partner who was looking to buy?

@Junipercrumble, I totally agree, both my aunty and MIL have social housing and want for nothing. MIL has passed now but as she had no savings when she was unfortunately ill she got all care and adjustments made to the house FOC, my aunty has recently has a new bathroom and kitchen fitted.

I dont begrudge either of them, they both worked throughout their lives and brought up families, however what happens to those that cant secure social housing, theres no way on earth you can privately rent on a state pension.

It depends on choices, doesn't it.
I rent and will be doing so right through retirement. I will only have a state pension but I can live on that quite happily.

Of course, there's no saying how things will change in the future, and in 30 years' time the economy may well be very different.

However, you don't have to own your own home to have a good retirement. But I do not consider living on a state pension to be the "government paying for my rent". It isn't, I paid my national insurance all those years for it.

They are being extremely naive if they think that renting when retired will be this amazing thing. My mum is a pensioner, and despite being mortgage free she struggles to get by. There's no way she would be able to cover any rent costs.
Our plan had always been to be mortgage free as early as possible. I do not want a retirement featuring scrimping.

Pensioners dont have their housing benefits reduced for under occupancy (ie no “bedroom tax”).

I don't know enough about the truths of renting vs buying in the UK housing market. I know overseas the pros of renting are more evident but that's because normal houses aren't quite the insanely expensive commodity they are here.

I hope there are some pros to renting as it will be decades be before I can even think about buying.

However they need to rethink their idea of accommodation - this could change in 30 years I suppose but as far as I know, if you are single with no dependents you don't get housing benefit for anything above a shared room, and as others have said there is a bedroom tax too. Plus a large element of HB is again, geared at people with dependents and I think the rate drops a fair bit once you don't have school aged children living in the property.

I'm hoping the system will change in future as it is quite worrying, but I simply can't afford to pay private rent and look after my kids well and save for a future different home. One of those things always has to be sacrificed and as you can imagine, it's the non tangible thing that will always go first.

Pensioners aren’t “charged” anything. But they do need to pay their rent and will only get housing benefits to cover the size they need if they are in private rental.

We always wanted to own our own property to give us stability but being mortgage free in retirement is a bonus. Our children have taken the same path so I agree with you. The brothers are being naive that benefits will pick up their rental bills in retirement. It will probably be a one bed flat in an area not of their choosing. Who wants to rely on government funding in their old age with no or little say of their own as to where they put you? As for turning down their grandmothers offer I think they will regret it. People who only live for today usually regret it as they get older as I guess they don't have a private pension either

I really really don't want the government to be able to tell me where I can live in retirement. It's nobody's business but mine, as long as I can buy it outright or afford to rent it and pay the bills.

For the sake of the thread, I will add that I don't believe that anyone believing in a comfortable retirement funded by the public purse is anything other than a deluded donkey. My 90-y-o demented DMIL has a limited existence, for which she is paying £975 per week (over £4000 per month) for accommodation, food and care. But she is well and kindly looked after, which can't be taken for granted. But it is her money that funds her care and subsidises the residents for whom the council pays.

People with just a state pension will likely get most of their rent covered by housing benefit. Pensioners in receipt of even a pound of guaranteed pension credit get their rent and council tax covered in full. Not sure whether the local housing allowance rate still applies, I assume they can't live in a house in a very expensive area and have it all paid for.

There are many many pensioners in private rented accomodation. I do know this as I deal with them every day. If they just get state pension they would likely get a significant chunk of their rent paid for by claiming housing benefit. It does depend on state pension amount of course as with any means tested benefit.

In my job I also see the other side of it. many pensioners who have bought their properties but can't actually afford to maintain them adequately because they only have state pension and maybe a small private pension coming in. Then they look to equity release schemes or the house falls into a state of disrepair and they really struggle. They can't afford walk in showers when they need it ( they may get a grant if they are lucky ), can't afford boiler replacements etc

The two brothers sound rude, ignorant, ill educated and very naive.

There may be nothing but an absolute bargain basement state pension in 30 years, and it may be that people who earned well won’t qualify for pension credit (which probably won’t exist by then anyway).

If they’ve no house to sell, no private pension to live on and no big inheritance coming they are going to be screwed. To say nothing if either of them become too ill to work at a young age. Heaven help them.

Good on the cousin for having his head screwed on the right way.

How nice for them. Meanwhile where I live the social housing waiting list has topped 3000.

@XingMing
Once and yet again I will point out that aside from NHS rare cases, the council subsidises, it does NOT provide care free. Everyone pays towards their care, from income if not capital. As a sw I got so fed up with 'they get free care, never worked, why should my relative have to spend capital' lines like this.

There's been a massive building of her over 55 housing in the county that I live in, so some councils are planning well for the future. We are Up North, so the thought of life in retirement for the majority isn't scary, we are used to low wages. I know a few self employed people who will have the equivalent disposable income on a state pension, with a small private pension top up, than they have now. Repossessions were up to record levels because of Covid and government policies. They are set to continue because of the cost of living crisis. The Tory's rely on the pensioner vote, hit the pensioners too hard and out they go. It's why pensioners wasn't subject to the bedroom tax. We are encouraging immigration from the commonwealth. Many of those will start paying into a pension when they get here, often in their 30/40's etc and won't get on the property ladder. There will always have to be state provision because of the structure of our immigration and welfare state model. Where we live houses start at £60k, so it makes sense to buy if possible, but not necessarily if property is silly money and your income may drop.