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Mortgages

2.5m over-55s plan to downsize in retirement

Lucinda Beeman
Written By:
Posted:
14/11/2014
Updated:
14/11/2014

Four in 10 (41 per cent) of homeowners over the age of 55 plan to sell their current property, according to the bi-annual Prudential Downsizing Index.

According to the index 75 per cent of these homeowners are looking to downsize, attracted by the convenience of running a smaller home and lower day-to-day maintenance costs. Some 35 per cent say they will relocate to another town or city in the UK after selling up.

The most popular destinations for so-called ‘last time buyers’ include Cornwall, Arun, North Somerset and Gwynedd.

On average homeowners hope to release £87,600 in cash from the sale of their homes, up from £85,3000 in May of this year. Almost half (45 per cent) plan to spend the cash on holidays or luxury items while 48 per cent say they will save or invest the money. For 40 per cent the cash will go to bolstering retirement savings.

Vince Smith-Hughes, retirement income expert at Prudential, said: “Our homes are often our most valuable assets, but also one of our greatest expenses. The financial benefits of downsizing, from both a cost-saving and releasing capital perspective, can be very enticing. But those who are considering it should exercise caution and be careful not to overestimate the level of funds they expect to receive.

“Freeing up cash as a result of selling your property may be appropriate for some, but it should never be seen as a substitute for saving for retirement. The best way to secure your desired standard of living in retirement is to save as much as possible from as early as possible and to seek professional financial advice on the best retirement income options available for your needs.”

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