Downsize dream is 'a fantasy'

Published 22nd Mar 2010

Homeowners are wrong if they think moving to a smaller place will give them enough money to fund their retirement.

Almost half of those aged over 50 think downsizing will be their key to a prosperous retirement, according to Saga Financial Services.

It says the average retired couple want to draw £46,000 from their property to supplement pensions and other savings. This means they will have to buy a new home for at least £56,000 less than the sale price of their existing one, to account for costs.

But in most regions the difference in property values is not enough to release the desired sum.

The average price of a detached house is £290,208. A semi is £166,024, a terrace house is £150,307 and flats cost £159,292, according to Halifax. The average price of a bungalow is £192,373.

Unless you own a detached home - or live in wealthier areas of the South-East where the differentials are higher - trading down will not work.

Saga's Ali Crossley says: 'You often hear people saying that downsizing is their pension. But for many, unless they plan to live in a tent, it isn't.'

She says more homeowners may have to consider equity release plans.

Source: ' Daily Mail '

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