As downsizers free up “shockingly low” sums, retirees are advised to “don’t get forced into a corner.”
Pension and state pension income, as well as buy-to-let investments, can all be used to fund retirement. Retirees are being advised today to avoid getting themselves into a bind.
Downsizing is another option for some people who want to save money for retirement. However, it is not for everyone; according to recent data from Hargreaves Lansdown, barely a third of people (34%) say they will not downsize in retirement.
According to the conclusions of a poll of 2,000 people conducted in April 2021, one in five persons (22%) is certain they do not want to shrink, while 44 percent are unsure.
The biggest reason for those who refuse to downsize is that they are too attached to their current residence (38 percent).
Moving costs related with downsizing were a concern for one in every five people.
Downsizing is more common in the plans of younger people and higher-rate taxpayers, according to the study.
According to Hargreaves Lansdown, one in every 20 respondents intends to conduct equity release rather than downsize.
“Done well, downsizing is a terrific answer for a wealthier and less stressful retirement,” said Nathan Long, senior analyst at Hargreaves Lansdown.
“However, if you don’t prepare well, you can find yourself in a bind, with less money, room, and flexibility than you require.
“Downsizing may appear to make financial sense on paper.
“At the moment, you can borrow money inexpensively with a mortgage, buy a huge house, and earn handsomely if property prices rise.
“It’s also tax-free to sell your primary residence and downsize, though you’ll have to pay stamp duty on the new home.
“However, returning home later in life is a highly emotional decision.
“Few individuals enjoy leaving a familiar environment, leaving a home where they have accumulated a lifetime of memories, or downsizing to a smaller home with no room for the grandchildren.
“It’s one of the reasons why, as we become older, we’re less inclined to be enthusiastic about the idea.
“While 24% of 18–34-year-olds say they aim to downsize in retirement, only 15% of those 55 and older say they plan to do so, as the decision to relocate approaches and we realize how difficult it will be.”
Mr. Long went on to say that they posed “severe hazards.” “Brinkwire News in Condensed Form.”