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As you reach retirement age, downsizing from the big family home to a more manageable size is a natural progression. With the rise in house prices, selling your biggest nest egg for a smaller property can help fund your retirement or even just provide extra financial padding to make a few dreams come true in your golden years.
By downsizing, moving to a smaller and cheaper house, you can use the money you have released through the house sale to fund your retirement.
Kelvin Elliott, Director at Yes Homebuyers, a quick house buyers company states,
“Moving house at any point, let alone in retirement, can be a massive upheaval but can really help later in life. It may be that paying for electricity and gas in a four-bedroom house no longer makes sense or you simply can’t manage a large garden anymore. There are a number of reasons why downsizing provides a financial solution during retirement.”
If you’re faced with any guilt over spending the kids’ inheritance, you’ve earned your retirement and should live it as well as you can. A survey by the Joseph Rowntree Foundation found that two-thirds of parents plan to enjoy life and not worry too much about leaving a legacy.
If you can spare the money, helping out a loved one with a house deposit and getting them on the property ladder is a gesture that will surely be appreciated. Another bonus to spending the kids’ inheritance is avoiding any potential legal costs, delays and challenges to your will after you’re gone. Grief and money can affect a family dynamic and removing this hurdle can be beneficial.
According to a large survey carried out by the Financial Conduct Authority into Britain’s personal finances, roughly 15 million people have no pension savings. The Financial Lives survey, which looked at 13,000 consumers, found that 31% of UK adults have no private pension so will be entirely dependent on the state pension when they reach retirement age. Every case is different and an individual’s reason for downsizing can be miles apart.
Make a plan
When downsizing, think ahead to how your new home will fit your needs in 10 or 20 years time. As this will be your home during retirement it needs to serve you well now but also in the future when you are less mobile. Think about the maintenance of the property, if it’s easy to navigate physically and the bills are manageable. You don’t want to have to downsize two or three times more in the future. If you take into account certain contingencies now it can help you prepare for later in life.
Downsizing may leave you with more money for any home modifications that will help create your dream property. Even though your property may be smaller, you’ll have the budget for a brand new kitchen or landscape your garden just the way you’ve always wanted it. Leaving the big family home behind can be a daunting thought but it will help to sort through any clutter you’ve picked up along the way and help create a house to your exact specifications.
A dream holiday
You may have always wanted to go on your dream trip whether that means seeing the world in your prime years or taking the holiday of a lifetime. Downsizing can help fund the trip of a lifetime. Invest in an RV and take it around the world, seeing the sites from the comfort of your mobile home. Or retire around the world on a cruise ship. Retirement frees up the time you may have never had while working so it’s important to make the most of it.
Life is too short to delay having exciting and fun experiences. As you get older, you may not have the physicality to travel long distances and explore so do things you’ve always dreamed of. There’s a big market for twilight travelers and luxury travel trips are no longer just suited for the young.
Downsizing your house can result in simply being able to live more comfortably during retirement. Something so simple can make such a difference. Having additional cash finances means you can afford to live a certain way. Whether that involves a more luxurious way of living or being able to indulge every so often, it makes retirement much more exciting.
You don’t need to go on an around the world trip to live a great life as you get older. You have a chance to spoil the grandkids or spend several months a year traveling abroad. Downsizing can not only fund your retirement but create additional opportunities you may have otherwise missed.
The post Why downsizing and spending the kids’ inheritance is what you need in retirement appeared first on MoneyMagpie.