Downsizing and retirement planning

Askfirst

Reading posts on here is bitter sweet, I wish I had joined earlier! I may have missed a few opportunities to make a better retirement pot than I did. But I am lucky enough to be mortgage free at least. So on that theme, has anyone got any pointers on how to optimise for retirement any funds released from downsizing ?

Albermarle

Askfirst said:

Reading posts on here is bitter sweet, I wish I had joined earlier! I may have missed a few opportunities to make a better retirement pot than I did. But I am lucky enough to be mortgage free at least. So on that theme, has anyone got any pointers on how to optimise for retirement any funds released from downsizing ?

Do you already know how much funds will be released by downsizing? Have you done it already, or in the process?
I ask because if it is still a theoretical figure for the future, then often downsizing does not release as much money as first thought.

katejo

Askfirst said:

Reading posts on here is bitter sweet, I wish I had joined earlier! I may have missed a few opportunities to make a better retirement pot than I did. But I am lucky enough to be mortgage free at least. So on that theme, has anyone got any pointers on how to optimise for retirement any funds released from downsizing ?

I am not sure that it is that good an idea. I am not planning to downsize unless I can no longer climb the stairs in my terraced house. A move to a flat would probably involve being in leasehold/shared freehold and I would have to pay such things as ground rent and maintenance charges (maybe imposed when I don't want them and with little choice for me). I am not yet retired but I am planning it.

arthur_fowler

We downsized a couple of years back. Have put the £120k funds into S&S ISAs (two people, three tax years).

LHW99

We didn't downsize as such, but moved to a similar sized house in a cheaper area with less land around it. It released an amount similar to arthur's which went partly into SIPPs, partly into ISA's, partly used to do some expected repairs on the new place.

Askfirst

Albermarle said:

Do you already know how much funds will be released by downsizing? Have you done it already, or in the process?

Hi @Albermarle
Only at the stage of researching possible locations at the moment. I am restricting the search to have at least 200k spare after sale/purchase in case the new home needs building work and also bolster a modest retirement fund before SP kicks in.  

Albermarle

Askfirst said:

Albermarle said:

Do you already know how much funds will be released by downsizing? Have you done it already, or in the process?

Hi @Albermarle
Only at the stage of researching possible locations at the moment. I am restricting the search to have at least 200k spare after sale/purchase in case the new home needs building work and also bolster a modest retirement fund before SP kicks in.  

The problem can be is that once you start really looking then that smaller home may look rather  small.  Also you might start thinking ' as I am retiring and have worked hard, I would like to live somewhere 'nice'' like by the sea.
A kind of natural human aspiration can happen, and will meant you will end up buying a more expensive property than you first imagined.
Just something to be careful of if you really need to generate much needed retirement funds.

Nebulous2

We found that the market was fairly compressed where we were and there wasn't as much to be released as we would have liked. Selling a house with a garden and moving to a modern two bed flat would have released around £50k came to the conclusion the compromises weren't something we were prepared to accept so we moved to a cheaper area. 

We did roughly 50 / 50  equities / cash with the money. The cash was intended to fill the gap until state pension age and to fund some house renovations. We haven't used as much money as expected by now so have been moving some more into equities.

Pat38493

We are in the process of trying to downsize so we will see how it works out if if we even go ahead.

I am lucky enough that my wife is quite visionary at creating a lovely environment in the house, so amazingly we have already received an offer at almost asking price from the first people who looked round, and the house isn’t even officially on the market yet.

However buyers have not sold their house and we have not found anywhere yet so it’s a good sign but nothing certain yet.

As for the money, I was originally planning to take tax free money from my pension this year to fill up ISAs and pay off part of the mortgage,  but with the downsize plan I will hold off on that we don’t want too much cash in non tax shielded accounts.

Mainly the obvious is to feed the money into ISAs, for both of you if a couple, as quickly as possible.  Apart from that you are into some fancy investment options which I don’t know enough about.

Keep in mind that you have to subtract the cost of all moving related items like stamp duty, solicitor fees, removers, estate agent fees etc - this can easily run into 5 figure sums.

LHW99

Keep in mind that you have to subtract the cost of all moving related items like stamp duty, solicitor fees, removers, estate agent fees etc - this can easily run into 5 figure sums.

And storage - it you are truly going to somewhere smaller, but want / need time to sort through possessions. That's not cheap.

MarzipanCrumble

There is little incentive to downsize, especially if you don't really need the equity it might release.  I live in a great location overlooking a park and lake within 3 miles of city centre but public transport is dire. 

Loathe to get a flat, service charge/ground rent/council tax) and I have a cat who would not appreciate 'prison'.

Houses that I like are about 200-250k cheaper but often the council tax is more and not as insulated as my house is.  Take into account all the costs of moving and really why bother?