Downsizing Property For Retirement May Not Provide Sufficient Income

Many people rely on downsizing their property to supplement retirement income, however research by Standard Life shows that this may not provide sufficient funds

Downsizing from a large family house to a smaller bungalow to unlock retirement funds has long been a popular way of supplementing a formal pension. In some cases, this has been the only means of providing income for retirement.

The research shows, however, that this approach may not provide sufficient funds as recent falls in property prices and annuity rates have eroded the income from downsizing.

On average, downsizing a home in the UK will provide only £43.501 a week retirement income, compared to £53.40 in 2008, Standard Life found. Switching from a detached house to a bungalow would potentially provide a pensioner £71 per week compared to £100 per week in 2008.

Pensioners would be disappointed to find that moving from a semi-detached home to a flat would only release £4 per week, on average.

As property prices vary considerably from region to region, and the price gaps between types of property vary also, pensioners in different parts of the country may benefit more from downsizing than others. For example downsizing from a detached property to a bungalow in Greater London will generate £158 per week (£207pw in 2008), whereas a similar move in Scotland would provide only £37 per week (£56 in 2008).

Standard Life have created a website – www.getarealitycheck.co.uk to support people with long term savings plans. This includes tips and tools to help plan for the future and therefore reduce the reliance on property downsizing to supplement retirement income.