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Don’t bank on downsizing for retirement income

Don’t bank on downsizing for retirement income

Category: Mortgages

Updated: 07/04/2010
First Published: 07/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
People thinking of downsizing their home to pay for their retirement have been warned that it may not bring in as much income as they expect.

Selling up and moving into a more affordable property has long been a method used by those looking to boost their income in retirement.

However, research conducted by Standard Life has found that downsizing a home in the UK will only provide an average weekly income of £43.50 in retirement, compared with £53.40 two years ago.

The amounts consumers could generate from downsizing before retirement vary greatly depending on circumstances.

Moving from a detached house into a bungalow could potentially deliver £71 per week, although this is still significantly less than the £100 a week that could have been raised by such a move in 2008.

Those living in greater London could boost their retirement income by as much as £200 a week if they were prepared to swap their detached home for a flat.

"People pinning their retirement dreams on downsizing their property will be in for a shock," said Andrew Tully, senior pensions policy manager at Standard Life.

"A combination of a fall in house prices and annuity rates has dealt a double blow to many, with the average pension pot from downsizing only providing £43.50 a week income.

"Banking on downsizing to generate sufficient income is a potential retirement disaster unless you have also made provision elsewhere."

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