Should I downsize my house in retirement?
Not everyone wants or needs to downsize, but for a lot of us it's a positive move that gives us a degree of freedom in retirement. According to Prudential, 2.5 million 'last-time buyers' are planning to downsize. 75% of homeowners over 55, who are planning to sell up, will opt to downsize, with 40% using the fund to boost their pension pots. Whether you're thinking about downsizing, or seriously making moves to, well, move, we've got some great financial reasons as to why you should go for it, including tips on how to make it a smooth transition.
1. When is the right time to downsize?
Sometimes, timing is everything, and if you're planning to downsize it's better to act sooner rather than later. Your home is the product of a lifetime of work and when it comes to accessing some of the cash, it pays to move fast. Not only will you be less inclined to invest time and effort in moving years down the line, but if you're moving to a new area, it will be easier to meet new people, explore your surroundings and put down roots.
2. The equity release alternative
Equity release loans are a popular way of releasing some of the cash sunk into your property, without having to move. But beware - interest rates are generally higher than mortgage rates and you will end up paying far more money over a long period of time.
3. Downsizing can shrink your costs
Homes are expensive things to run, not least a big family home with plenty of rooms and a large garden. If it's an older property, maintenance costs can also skyrocket (and don't they always seem to come along when you can least afford it?). Less space to heat and fewer rooms to light means smaller bills. Downsizing is an effective way of reducing these outgoings.
4. Location
Finding a location that's scheduled for regeneration or revamping can mean your investment is worth more. By the same token, you want to make sure your investment isn't undermined by plans for airports, motorways or industry. Bottom line? Do your research!
5. Practicality
Tired of having to dedicate half a day (and some marathon training) to running the hoover round the house? Find you can't hear your other half when they're in the lounge and you're upstairs? Well alright, the last one could be seen as a plus, but the reality is that too big a house has its disadvantages. Not to mention too big a garden... weeding, anyone?
Downsizing can mean less time spent on maintaining your home and more time for enjoying it instead. And good things come in small packages - a cosy home is no bad thing.
6. A fresh start
As well as the many financial and practical benefits to downsizing, there's a huge psychological boost to be had too. Being forced to adapt to a smaller space furniture-wise and having less storage space means you really consider what's important to keep and what's not. And who doesn't feel better and less burdened after a good sort-out? Check out these tips on how to declutter.
Images: Shutterstock