Downsizing plan to fund retirement?

Downsizing may seem an attractive part of preparing to fund your retirement for many with substantial properties that are nearly paid off and Enable’s experienced IFA’s in Bishops Stortford know that property can form a significant part of a retirement  plan.  But downsizing may not be plain sailing when you consider all the costs associated with buying and selling form the estate agency fees and the legal fees and the cost of moving not to mention the stamp duty on larger properties sometimes, downsizers may not find themselves able to unlock as much capital as they hoped for– even in a rising market. "If property prices have gone up it means you'll get more for yours when you sell, but it also means you'll have to pay more for whichever property you buy next. Also many people find that when they downsize they can't afford to buy a property they like in an area they like."

And the move might not be as attractive or convenient as you had hoped while you imagine you'll be able to manage with a smaller property after all the children have left home the reality could be different if grandchildren come along, fewer bedrooms, getting used to smaller kitchens, cramped living spaces and no off-road parking could fee to some like a real downshift in your lifestyle at the very time you want to start enjoying it.

Relying on property too heavily can mean putting all your eggs in one basket and it is difficult to get any real diversification when investing in property. For most people the best approach for long-term savings is a combination of pensions and ISA’s. Pensions provide initial tax relief which give your savings an immediate uplift but they are inflexible, whereas ISA’s can still be tax-efficient and you are able to access your money whenever you like. That's not to say that an investment in property cannot form a part of your retirement strategy but maybe not all of it.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Downsizing payouts

A survey conducted by Lloyds TSB recently found that Just over half of home owners they surveyed who are planning to move house in the next three years said they plan to downsize, compared with just over a fifth (22pc) who are looking to trade up to somewhere bigger.

63pc of those looking to downsize are aged over 55, more than a quarter are aged between 46 and 55 and around 5pc are aged between 36 and 45. 33pc of potential downsizers saying they need to move to reduce their household bills and 37pc saying they would like to free up some equity. Three in 10 of those planning to trade down said they were doing so to boost their retirement income.

Trading down from a detached home to a bungalow could produce an average windfall of just over £97,000 across the UK. Meanwhile, someone downsizing from a detached home to a semi-detached property across the UK could gain just over £120,000 on average, a 46pc increase on the £82,412 typical windfall in 2002.

Stephen Noakes, mortgage director for Lloyds TSB, said: "Downsizers are now playing a key role in the housing market and, as the study shows, we are starting to see home owners on different stages of the property ladder considering it a sensible option as more and more families are looking at ways to save money." Whatever stage of the housing cycle you are facing Enable’s IFA’s can help you find the best financing deals to suit the needs of your family.