More over-55s are choosing not to downsize their homes. The sense of community they enjoy in their current home and the space it affords them means the next generation of retirees are more likely to stay in their current home. It’s a choice that could lead to a better quality of life in retirement if planned carefully.

Just 1 in 4 homeowners over 55 plan to downsize

According to research from Legal & General, 1 in 4 homeowners over 55 plan to downsize. Traditionally, homeowners have sold their family homes and bought smaller properties as children moved away. However, a new trend suggests more homeowners plan to remain in their current property.

There are plenty of reasons why over-55s want to say in their current home. The top reason for not selling is that homeowners don’t want to leave the community they live in. The second most popular reason was that homeowners recognised the importance of space following pandemic lockdowns. Having space to enjoy and having family and friends close by can be a huge positive factor in the life you enjoy in retirement.

If you love where you live and the home you’ve built over the years, it can make sense to remain there rather than selling.

2 things to consider if you decide to stay in your current home

Traditionally, there have been two reasons why homeowners downsize: to purchase a home that will meet their long-term needs and to release equity from their property. If you plan to stay in your current home, you should consider if it could impact your retirement lifestyle.

1. Will your home meet your long-term needs?

Your home may be suitable for your needs now, but will that still be the case in 10- or 20-years’ time? Think about the kind of lifestyle you want to enjoy throughout your retirement. Does it provide you with easy access to the facilities you enjoy? Will your home still be suitable if your mobility is reduced?

Often, there are steps you can take to ensure your home continues to suit you throughout your years. Thinking about these steps now can help you create a practical plan that will boost your confidence in the future.

2. Do you need to use property wealth to fund your retirement?

Another popular reason to downsize is to release some equity to fund retirement plans. Creating a financial plan using other assets, such as pensions, savings, and investments, can provide peace of mind that you’ll have enough without selling your home.

If you do find a gap in your finances, there are ways to release equity from your home without having to move. While not right for everyone, equity release may be suitable for you.

Accessing property wealth without downsizing

Equity release is one solution for accessing property wealth and means you can remain in your current home. The most common way to release equity is through a lifetime mortgage.

This option would usually provide you with a lump sum, the amount will depend on the value of your home, which is borrowed against the property. Interest payments are usually rolled up, so you don’t have to make regular repayments. Instead, the amount borrowed and any interest accrued is paid for by the sale of your home when you pass away or move into long-term care.

The equity release market is becoming increasingly flexible. Most options will have a no negative equity guarantee, meaning you can’t owe more than your property is worth. In some cases, you can choose to make repayments to manage the amount owed.

However, it is a choice you need to carefully weigh up with your other plans. For instance, it will mean you cannot leave your home to loved ones. As interest is often rolled up, the amount due can quickly rise and you can end up owning far more than you initially borrowed.

Before you decide to proceed with equity release, you should weigh up the pros and cons with your goals in mind. For some, it can provide a cash injection that means you’re able to live the retirement lifestyle you want without having to move. For others, the drawbacks will mean an alternative makes more sense for them.

If you’d like to discuss your retirement plans and how to create the income you need, please contact us. We’ll work with you to help you understand what your options are.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.