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Downsizing for retirement in your local area

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Quick Tip:
65% of unretired people have no intention of relocating

Downsizing can be a scary prospect for those ready to retire. Whether you’ve lived in your house for a year or decades, it may be somewhere that you’ve brought up children and made countless memories – so no wonder there can be a sense of attachment. This is why it’s important to think carefully about whether to make this important step.

Our Voice of New Retirement Report1 found that nearly two thirds (65%) of the unretired had no intention of relocating during retirement. However, the same study revealed that three quarters (74%) of adults’ main priority is to be financially content in their old age. This could be because the length of retirement is getting longer and the government pension pot is declining in size.2 Downsizing has emerged as not only a great way for people to release cash from their assets, but also allows older people to relieve the burden of getting upstairs or maintaining a large garden if their health begins to decline.

For some people, the worry about downsizing stems from possibly being far from family and friends. This is why some make the compromise to move to a smaller home closer to the people that matter to them. We spoke to Suzi K, a 57-year old semi-retired teacher, who downsized in 2008 but stayed local to avoid family upheaval. She told us that this allowed her to go part-time at work, and focus on her own health. As mother to two adult daughters, Suzi has been careful to weigh up the options, and leave herself with the things she needed in her existing area.

I stayed local so that my girls were near to their friends and transport links

Suzi originally had a large property with land and outbuildings, and is also the owner of a smaller property. She explained: “I still have my own detached home which has been rented out for the past year as I no longer needed it for my daughter to live in after she finished uni.” She has since been able to move to a smaller house with her partner, but not sacrifice the bedrooms she wanted to keep in case her daughters visited.

Not only did moving to this new house make the space more realistic for the people living in it, Suzi was able to release £100,000 from the sale of the larger property. Additionally, through renting the house and moving in with her partner, this gives Suzi a great deal of financial freedom, and the remaining £1,500 of her mortgage will be paid off by January 2017. She is "very excited that total ownership of my house is now so close."

Looking to the future

Our studies show nearly three in five people feel that they will need to rely on housing wealth to get them through retirement.3 Suzi, however, has refused to keep her eggs in one basket, and on top of her rental income has two private pensions which she will use when she feels ready. A smart savings plan also helped her get there, “I am confident that I will have enough income because I have always saved no matter how hard up I was,” Suzi tells us. Evidently, this is a strategy that has paid off, and there is a home ready and waiting if her daughters need to move back.

Additional sources

[1]Aviva’s Voice of New Retirement Report 2016 - www.aviva.com/media/upload/160301_Aviva_Voice_of_New_Retirement_report_-_FINAL_-_embargoed_for_07_03_16.pdf
[2]www.thisismoney.co.uk/money/pensions/article-1679780/New-state-pension-age-retire.html
[3]Aviva’s Real Retirement Report 2016 - www.aviva.com/media/upload/Aviva_Real_Retirement_Report_summer_2016_-_embargoed_for_Wed_27_July.pdf
[4]Aviva’s Real Retirement Report 2016 - www.aviva.com/media/upload/Aviva_Real_Retirement_Report_summer_2016_-_embargoed_for_Wed_27_July.pdf

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