Two out of every three retirees consider reducing their home, but this isn’t the only choice.
Being a homeowner later in life gives you a financial advantage because you don’t have to pay rent and you own a large asset whose worth has increased dramatically due to rising house prices. It can, however, be a hardship, particularly if you own a large family home and your children have left the nest.
According to Hargreaves Lansdown research, two-thirds of people say they would consider downsizing to a smaller home in retirement, but some say they are too attached to their current home and others are concerned about the cost of moving.
Downsizing may be a good option for older homeowners who have made a large profit, but there are fees to consider, according to senior analyst Nathan Long: “When selling, you’ll have to pay estate agent fees, legal fees, stamp duty on your new home, and removal costs.”
Due to high demand from downsizers, popular downsizing options such as a beach property or bungalow may be more expensive than you anticipate.
“You may end up with less than you expect once you add renovations and enhancements to the new property,” Long added.
“Few people appreciate leaving a location where they are comfortable, and a home with a lifetime of memories,” says one expert.
Lower recurring expenditures, lower energy bills, less bother and maintenance, and the ability to live where you want are all advantages of downsizing.
If you do receive a lump amount as a result of downsizing, you must decide what to do with it. “Inflation will erode money remaining in a savings account, so you may need to invest in stocks and shares, which is riskier.”
Long suggests putting it into a pension: “If you’re under 75, you may continue receive tax relief on contributions even if you’ve ceased working.”
Non-working people can contribute up to £2,880 to a pension each year, with the government automatically adding 20% tax relief – worth up to £720 – on top.
If you’re downsizing, strive to maximize the value on your property, according to Nick Sanderson, CEO of luxury retirement village builder Audley Group: “Maintaining or updating your home, or adding extra space by turning your attic or garage into a new room, can.”Brinkwire Summary News.”