A quarter of retired homeowners want to downsize to a smaller home to raise money to help fund their retirement.
Around 80% of these retired homeowners want to buy another home – and besides raising money, see a smaller home as more convenient and less costly to run.
On average, elderly homeowners expect to release around £62,000 from downsizing as well as reducing their monthly bills.
When asked, 23% said the money would boost their retirement savings, 13% wanted the cash to repay debts and 8% need the cash to supplement day-to-day living costs.
Almost quarters (22%) of retired homeowners still have a mortgage – paying out an average £254 a month to lenders.
Motivated by money
Many over 65s considered the convenience of running a smaller property was the main reason for them to want to downsize, with 48% saying the move would give them a less complicated life.
A third are motivated by money – with 22% wanting to raise cash to put in the bank or invest, while 11% are seeking cheaper bills.
Stan Russell, retirement expert at Prudential, the financial firm behind the survey, said: “The value of money locked up in homes is seen as an income resource by many pensioners who own their homes. The figures suggest around a million want to sell and buy again for the last time.
“Unlocking cash from a home is not a good financial plan for retirement. Prices can fall and leave them high and dry when you were expecting to make some money for retirement. Saving as much as you can as early as you can is a much better option.”
The majority of retired homeowners want to continue to stay in a home of their own – just not the one they currently live in.
Only 6% are looking at moving into sheltered homes or care homes and only 4% are considering renting a home.
Some are planning to move in with relatives, but most will continue living alone.
“For some pensioners, downsizing is a lifestyle choice, but in the end, for most the decision is based on their finances,” said Russell. “The research showed that those expecting to buy a smaller home are planning to save around £168 a month on the difference between mortgage and rental costs.”
Another recent report from the Prudential revealed that many of former pensioner homeowners moving into rented homes had to sell to raise money to pay debts or to finance a relationship split.