Downsizing and retirement planning

Sarahspangles

Askfirst said:

Sarahspangles said:

If you want to invest money that you realise from selling a larger house into a pension, then you need to do that while you’re still working. 

Hmm, do you think that mean PAYE exclusively, or would running a business as a self-employed person count?

Plenty of self employed workers have a personal pension. The reason for mentioning that you need to contribute while you’re still working is that once you aren’t, the maximum amount you can put in is £2,880 a year which gets made up to £3,600 with tax relief.

It may be worthwhile you starting a new thread. The sort of things you’d need to explain are:

1. What your ballpark profit/income is per year.
2. Whether you trade as a Ltd Company or self employed.
3. Whether you have an accountant (probably needed for some options)
4. The amount you may be able to put in a pension a) now and b) if you downsize.
5. How long you have to go until you hope to retire.
6. Whether you are on track for a full State Pension.

FIREmenow

You're restricted by your relevant earnings, if you have no earned income then the maximum you can put into a pension is £3600 gross per year (or putting more in has penalties). It's more complicated than that, but I think that is what Sarah is referring to.

randompenitent

Returning to the original question of what to do with the funds that are released, it would depend on how soon I thought I might spend them.  If it's not going to be for a few years, then stocks & shares ISAs seem the obvious choice but you're limited to £20k/year/person, so if you are lucky enough to have lots of money to invest, it will take a while.  If it's short-term, then the tax protection of an ISA is less critical.

I'm in the process of upsizing (kind of). Moving from an expensive city centre flat to somewhere with more space well away from the city. We'll use some of the money to improve the new place and the rest will be mixed between ISAs and a holiday fund. 

Askfirst

As ever, one question leads to answers that raise other questions you haven't thought of. Many thanks for the above clarifications and for sharing future plans.

robinwales

Perhaps we should all live in high-tech, high-quality modular houses, each module the size of a shipping container. As your family grows you could purchase, either new or used, additional units for extra space. They could either go upwards or at ground level. When your family size contracts you simply move your stuff into a reduced number of modules, which reduces the overall size of the 'house', and you sell the modules you no longer need. You keep the same garden, the same neighbourhood, the same local friends and contacts. No estate agent fees, no stamp duty, no move costs, no hassle. Welcome to modern (future) Britain!

As for my wife and I we are keeping our 2,000sq ft 4 bed detached traditional house. We are fortunate to have more than enough income and savings to pay for extra heating, maintenance costs etc. Some might think that wasteful but moving house is very expensive and stressful.