Financial concerns were given as the main motivation for stepping off the property ladder for the 42% of renting retirees who used to own their own home, Prudential said.
The study found that around one quarter (25%) of retirees rent their home and nearly three quarters of them (73%) plan to continue to do so for the foreseeable future.
The most common reasons for former home owners to have sold their property to move into the rental sector was that they had debts to pay or needed to cover the cost of a divorce or separation.
One in 11 (9%) former property owners said they had sold their home to boost their retirement income.
The findings come at a time when rents have soared following strong demand in the sector. Prudential found that retired renters pay £423 a month in rent typically, compared with £257 a month on average for retirees who still have mortgages.
Prudential previously found that people retiring this year expect to have an income of around £15,300 a year, meaning average rental costs would take up around one third of this sum at just over £5,000.
The Financial Conduct Authority (FCA) recently sounded a "wake up call" to borrowers and told them they must be prepared to communicate with lenders to work out what steps to take. Up to 1.3 million interest-only customers do not have enough cash to pay their loans back.
Almost one in six (15%) of retired renters choose not to own their home as a lifestyle choice, while 35% could not afford to raise a deposit, the Prudential research found.
Stan Russell, senior pensions business development manager at Prudential, said: "Renting in retirement can make financial sense and accessing property wealth to boost retirement income is a genuine solution for many. Our research shows that many retired renters are perfectly happy with this arrangement.
"However, retirees should be aware of the extra financial burden they could be taking on if they choose to sell up and rent.
"The fact that some retirees say they are being forced to sell up purely by the need to pay off debts is concerning and suggests they are not receiving professional advice. Organisations like the Money Advice Service and Citizens Advice offer free advice and can help enormously."
Around 740 people who are retired took part in the research across the UK.