Two million over-65s planning to sell home to fund retirement
28th August 2013
Research carried out by Prudential has found that over a quarter of retired homeowners plan to sell their homes to help ease the pressure of living on a pension, according to a recent article in The Telegraph.
As reported by John Bingham, the paper's Social Affairs Editor, many older people are looking to downsize their living accommodation way before they need to think about the costs of care. According to Prudential's research, the majority of people who are planning to sell their homes are hoping to purchase another property instead of going into a care home: an action that will release substantial funds which they can then spend on anything from riser recliner chairs to a new car.
Around 10.4 million people in the UK are over the age of 65 and almost 75% of these people currently own the properties they live in. Prudential's findings show that around 26% of these retired homeowners have plans to sell their homes, with 4 out of 5 of these intending to buy another property. Most of these people are looking to downsize their accommodation by purchasing a smaller and cheaper home, which will free up as much as £62,000 on average, according to the study's estimates.
This cash injection could make a huge difference for retired homeowners, with 25% of them saying that the funds will be used to supplement their pension, allowing them to spend more money on enjoying their retirement and having new stairlifts installed in their homes. Around 10% said that they would downsize their property to pay off debts, and a further 10% said that it would help reduce their daily living costs, such as a mortgage and the cost of heating.
According to Stan Russell, a retirement income specialist at Prudential, "housing wealth is a significant source of additional retirement income for pensioners", but he also warns that it would be dangerous to rely on this instead of comprehensive, sensible retirement planning. Whilst downsizing is certainly a good option for retired homeowners, it is important that these funds are used to help plan for the future, so as well as providing the chance for pensioners to have the holiday of a lifetime, people should also make sure that some is put into savings to cover future care costs or for children and grandchildren.
The director general of Age UK, Michelle Mitchell, has welcomed the news and has said that downsizing is a "sensible choice offering many positive benefits", but that the amount people can expect to free up by downsizing differs vastly across the country. As well as recommending that older people "obtain independent advice", she says that there needs to be "further investment in affordable well designed homes" by the government.
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