People hoping to downsize in their retirement should be cautious about doing so, Vince Smith-Hughes, head of business development for Prudential, has said.
Mr Smith-Hughes said: “Our homes are often our most valuable assets, but also our greatest expenses.
“The financial benefits of downsizing, from both a cost-saving and releasing capital perspective, can be very enticing.”
He was speaking after figures in the firm’s yearly Downsizing Index showed almost 2.5m ’last-time buyers’ planned to downsize their homes.
The index suggested people looking to downsize also planned to move to another town within the UK, with Cornwall the most popular destination.
Mr Smith-Hughes added: “Those who are considering it should be careful not to overestimate the level of funds they expect to receive.
“Freeing up cash as a result of selling your property may be appropriate for some, but it should never be seen as a substitute for saving for retirement.”
Key facts
41% of homeowners over 55 plan to sell their current property
¾ will downsize, releasing an average of £87,600 in equity
45% will use the cash for big-ticket purchases
Source: Prudential
Adviser View
Shrewsbury-based Sebastian Van Mook, of Abacus Associates Financial Services, said: “I think downsizing is an absolute travesty. Every week I hear about people who are planning to downsize from a three-bedroom semi. They don’t think it through. Most people think £150,000 is enough for them to retire on.”
