Downsizing may not meet pension shortfall

Homewise is warning property owners who are planning to downsize to make financial provision for their retirement, that their plans may not be as successful as they anticipate.

Many UK homeowners are depending on equity tied up in their homes to supplement their retirement income.

Those who purchased property when prices were much lower than today will almost certainly be convinced that selling the family house and moving into a retirement home will be the answer to any pension shortfall.

However, research from the lifetime lease provider shows that increases in both house prices and pensioner debt can make this idea less attractive.

According to Homewise, the average pensioner needs to find £155,555 in order to account for outstanding debts, including moving costs.

At the same time, suitable smaller properties, including two-bedroom houses and bungalows, are at a premium in many areas.

According to Mark Neal, managing director of Homewise, “in most cases, it is now practically impossible to free up the kind of funds needed to enjoy a comfortable retirement by downsizing”.

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