Up to 2.3 million homeowners aged 55 and over are banking on raising money from their homes through downsizing.
More than three quarters who are planning to sell say that they aim to release equity from their home by downsizing.
Many then expect to use this money to fund their retirements.
Is that a feasible plan? We’re not sure.
Worth the bother?
On average downsizers hope to raise around £85,300 each, according to new research from Prudential.
In terms of additional income that this might safely generate the figure is around £300pm.
That is not a significant amount.
May be there’s another way to achieve the same uplift in disposable income?
Downgrading?
The problem most face is deciding where to downsize to.
Many have lived in their family home for 20+ years and like the area, the shops and their neighbours. Unfortunately the nice 2 bed flat just round the corner doesn’t exist.
You could end up moving many miles away from friends, family, grandchildren. You may not feel ready or willing to do that just yet.
We doubt you want to downgrade as you downsize.
High Cost
In addition to the emotional cost the monetary costs can be daunting.
Legal fees, surveys, stamp duty and a refurb could all eat into whatever cash is released from a move.
You could end up in a smaller property, in an area you don’t know with not very much more in the way of cash or income.
Our view
Think carefully. There are significant monetary and emotional costs involved which can’t be recovered if you make the wrong decision.
Don’t bank on downsizing being the answer to your retirement woes. Take advice and start planning now.
Have you considered all the options? Is there another way?
You may be surprised how existing savings and investments can be put to better use to produce retirement income.
Would you like to discuss retirement planning? Drop us a line or give us a call.
Our initial consultation is absolutely fee and obligation free.
We are experts – we have been working in retirement planning since 1994.
Email: advice@www.townclosefp.co.uk or call: 020 7993 4898
Sources: http://uk.prweb.com/releases/2014/05/prweb11869634.htm