Retirees now own almost £920 billion of property. With so much of their wealth tied up in their home, it's no surprise that many millions of people plan to fund their retirement at least partially through downsizing into a smaller place. Unfortunately, a new study reveals that these plans could be seriously flawed.
The study, by McCarthy and Stone, found that 17% of retired people who are downsizing are prepared to move less than five miles from their current home, while 32% are not prepared to move more than ten miles. It's perfectly understandable: retirement is no time to lose a community of friends and neighbours established over many decades. When you are already adapting to life without workmates, the last thing you want to do is try to cope without your old friends too.
Not as profitable
However, if you want to live in your current area, and are simply trading down in space with a downsizing move, you will free up far less cash than if you are prepared to move to a cheaper area, and in some cases could undermine the purpose of the move entirely.
The study also found that people aged over 55 were overwhelmingly looking to downsize to the same sorts of areas. Some 72% of retirees and 65% of the over 55s wanted to be close to health facilities. Meanwhile, 68% of retirees and 66% of the over 55s wanted to be close to local shops. There's a reasonable chance that many of them are also looking for a manageable, accessible property, with two bedrooms. It means these are likely to be in particularly high demand, pushing the price up further, and ensuring they make even less profit from a move.
Could you do it?
The study also revealed that a fifth of homeowners aged over 55 fell in love with their current property when they first saw it. It's unlikely they will feel quite so positively about moving somewhere smaller - possibly with less character. It means that when push comes to shove they may not be able to bring themselves to downsize at all.
It means that those of us who have factored downsizing into our retirement plans, could end up with a surprising shortfall.
The Lloyds study found that plenty of people had indeed factored it in. Some 46% of people expecting to move in the next three years were planning to downsize.
The question is whether it will be as lucrative as we hope - and whether we will be able to bear to do it at all. What do you think? Let us know in the comments.