More than one in three pensioner households could be renting by 2044, as declining homeownership threatens to reshape retirement adequacy, research commissioned by the Association of British Insurers (ABI) has warned.

The report, Pensions Adequacy: Housing, Households and Auto-Enrolment, conducted by the Pensions Policy Institute (PPI), projected that almost two million more pensioner households could be in rented accommodation by 2044.

Social renting among pensioner households is also projected to increase, while owner-occupation is expected to fall from the current 79 per cent to 64 per cent by 2044.

The ABI said the findings raised significant questions for the UK pension system, which has historically been built around the assumption that most people will retire with low or no housing costs.

The report warned that rising housing costs, low pension savings and changing household composition could leave millions struggling to maintain living standards in later life.

Indeed, it noted that renting a two-bedroom home privately throughout retirement could cost between £200,000 and £400,000, depending on location.

By comparison, median private pension wealth among those aged 60-64 is around £154,000, falling to around £105,000 for women.

The report stated this created a structural mismatch between expected retirement expenditure and current pension savings, particularly for renters and lower-income groups.

It also warned that housing costs in retirement are not adequately reflected in current pension-saving norms, despite likely becoming a core adequacy issue for future generations.

The report highlighted signs that some older households are already under housing pressure, including an increase in older people sharing accommodation and a 38 per cent rise in the number of over-65s taking in lodgers.

It said single-person households are particularly exposed, as housing and household bills cannot be shared.

Currently, around 30 per cent of UK households are single-person households, with around half of these households headed by someone aged over 65.

The report warned that this trend is likely to continue, increasing the risk that future pensioners will struggle financially unless saving levels improve.

It also highlighted the particular impact on women, whose retirement prospects can be more severely affected by household breakdown, including bereavement and divorce.

Divorced women aged 60-64 have average pension savings of around £35,000, just over half the level of married women and less than a third of divorced men, according to the report.

The ABI warned that these figures would be eclipsed by average retirement rental costs.

ABI director of long-term savings policy, Dr Yvonne Braun OBE, said: “We have made remarkable progress in expanding pension saving and reducing pensioner poverty.

“But the future will not be like the past. For previous generations, home ownership was a cornerstone of financial security in retirement, but for many younger people it will no longer be the norm.

“With more people renting, paying off a mortgage, or living alone in older age, we need to rethink what an adequate retirement looks like - and whether people are on track to achieve it.”

PPI head of research, Dr Priya Khambhaita, added that the projected rise in renting posed a “significant challenge” for retirement adequacy.

“With a greater share of retirees’ individual private pension wealth being eroded by ongoing housing costs throughout later life, this fast-accelerating pension adequacy challenge is already being felt by some of today’s pensioners, and no single policy lever will be enough to address it in isolation," she said.

“To improve retirement outcomes, the central question is not only how much saving should increase, but who most needs support, and how pension policy must interact with housing, social care, and the wider welfare system.”

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