Downsizing for retirement a questionable plan
The assumption that downsizing from the family home as old age approaches can help fund a comfortable retirement has been challenged by Standard Life.
The insurer has recently conducted an “extensive analysis” of the UK property market to calculate how much retirement income downsizing can generate, and is warning those whose retirement dreams are dependent on moving into a smaller property that they are in for a shock.
The research revealed that on average, downsizing a home in the UK today will provide only £43.50 a week retirement income, compared to £53.40 in 2008.
The reduction is due to the fall in property prices, combined with a reduction in annuity rates.
Moving from a detached house to a bungalow will potentially generate £71 retirement income a week, compared to £100 in 2008, and moving from a semi-detached home to a flat would provide only £4 a week.
During the property boom years, Britons may have favoured building equity in their homes to saving for retirement by other means.
However, Standard Life’s senior pensions policy manager, Andrew Tully, warns that “the old adage of not putting all your eggs in one basket has never been more appropriate”.