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Downsizing to help boost your retirement income

Are you rattling around a house that is too large for your needs? Downsizing in retirement can be a great option for some people both practically and financially, but it needs careful consideration.
A smaller property can have many advantages – lower household bills, less gardening, no stairs to climb, and closer proximity to local amenities. But downsizing is still a huge wrench for many people reluctant to leave their old home and neighbours.
Some things to consider when downsizing are:
  • Does it make sense financially?
  • What do you want from your new home?
  • Will you be near family and friends?
  • Are you prepared to dispose of old furniture and possessions?

Doing the sums

If you are downsizing your house to free up some cash for your retirement, provided you have enough equity to do so, it is vital to do your sums carefully. Some people downsize only to find much of their equity swallowed up by moving costs and renovation or maintenance costs on the new house.
Property expert Henry Pryor says: “When trading up or down the only thing that matters for most people is the difference between what you buy and sell for.

Careful consideration is needed before you decide to downsize

"Your home may have increased substantially in value since you moved in, but the value of other homes will have increased as well and your money may not stretch as far as you hoped.”
Remember to factor in stamp duty, which is payable on all homes over £125,001, as well as survey, solicitors and estate agents fees.
If you are planning to move to a flat, be aware that annual service charges to maintain communal areas and services can run to several thousand pounds a year and will increase with inflation.

Size and location

As with any house purchase, it is vital to think about your exact requirements and choose your location carefully. Jamie Lester, head of estate agency Haus Properties, says: “We see many people downsizing from large Victorian homes to new builds within the same area.
These are usually easy to maintain and secure, so residents can ‘lock up and leave’ their home without worrying. New builds are also much more energy-efficient than period homes, which means gas and electricity bills are lower.”
Richard Barber at London estate agency W.A.Ellis says it is also important to consider how you will get around: “Those with knee problems might want a home on one floor, as stairs can become a problem in later life. It’s worth looking for a place with a communal garden rather than large individual plots which are harder to maintain.
"With today’s retirees more active than ever, you should also look for the convenience of being close to shops, transport and within a nice community.”

Getting it right

Dorothy, 84, downsized last year to an apartment that ticks all these boxes. A retired sculptor, she moved from her two bedroom home in south east London, to a smaller apartment at a newly built housing development for the over 55s in a nearby village.
The development offers 24-hour concierge service, as well as a village hall, hair salon, restaurant, gardening room and residents’ library.
She says the biggest benefit is feeling part of a new community. “My neighbours in my old house worked full time so I often didn’t see anyone and felt quite lonely. Now my new apartment is like living in a hotel – there’s so much going on.”
My new apartment is like living in a hotel – there’s so much going on
The development is also near plenty of amenities. Dorothy says: “It takes me less than ten minutes to walk to the doctors or local shops, which is perfect because I no longer drive. I feel that moving has given me my life back.”

Family and friends

Dorothy downsized to an area she knows well and near to where her daughter lives – and the importance of familiarity and proximity to family cannot be underestimated for downsizers, say experts.
Tracy Kellett, a buying agent at BDI Home Finders, says: “Couples may have dreamed of moving to that picturesque seaside spot for many years, but the reality of moving away from friends, family and all that is familiar can end up being a nightmare.
"I have worked with a number of clients who made that decision and ended up moving back to familiar territory. The views simply couldn't replace their friends and their previous life.”

Sorting through old furniture and possessions

Anyone planning to downsize will probably need to dispose of furniture as their new home may not have room. It can be very difficult to part with heirlooms, but see it as a chance to start afresh and maybe make some money from selling your old possessions.
When downsizing, think about decluttering - throw out or sell anything you don’t need or no longer use. This means you can properly gauge how much space you’ll need in your new home. If you rarely use your garage, then you might consider looking for a property without one to save money and space.
While financial and practical considerations are vital to make downsizing a success, Kellett says it is also important to be ready emotionally. Do you really want to leave the family home?
“People should think carefully before making the leap, particularly if you're only doing it because you feel you should.
"Retirement is enough of a quantum shift in people’s lives without adding additional stresses and strains,” she says.
Are you thinking of downsizing? Perhaps you have already taken the plunge – was it the right decision? Share your experiences with us below or ask any questions you have and we’ll try our best to answer them for you from across our network.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.

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