How to downsize for retirement

Oli West

by , Team PensionBee

at PensionBee

25 Feb 2021 /  

A toy house covered by a grey blanket

Downsizing to a smaller and more affordable home can be a great way to free up money to help fund your retirement. But is it right for you?

What is downsizing?

Downsizing is simply the term used to describe moving from a larger home into a smaller one.

It’s most common amongst those approaching retirement due to certain lifestyle changes that occur around that time. This might include seeing the kids move out, not wanting to spend so much energy maintaining a large home, and wanting to free up some extra cash to spend in retirement.

Deciding whether to downsize for retirement

Before you up-sticks to a smaller home, you’ll want to consider whether downsizing is right for you.

Would you be happy in a smaller home?

Smaller homes tend to be easier to maintain and manage. You’ll have fewer - and possibly smaller - rooms to clean and keep tidy, saving you time and energy. This might be one of your main considerations as you get older.

But there’s also less space to move around in a smaller home, of course. And while you might not be moving into a cabin, you might want at least enough space to entertain family or friends when they visit.

Where would you want to live?

When choosing a new area to live, you’ll want to consider whether it can sustain the kind of lifestyle you’re hoping to maintain - is it home to your favourite supermarket, does it have a cinema, are there social communities of people who are a similar age?

You’ll also want to consider how easy it is to get to for any of your family or friends you might like to invite for a visit - you don’t want to be too isolated (or maybe you do!)

For more information, read “Best places to retire in the UK”.

How much money can you free up by downsizing your home?

Downsizing your home to free up cash to spend in retirement is one of the most common reasons to downsize. But the amount you need will depend on your desired location and lifestyle.

Check your pension to see how much you can expect to receive during your retirement, then calculate how much you plan to spend. If the numbers don’t add up, you might want to look into whether selling your home and moving to another area might improve your lifestyle.

See how much money you could free up by downsizing to a new area with our “Downsizing across the UK” guide.

How much is your home worth?

This will be the biggest factor affecting where you can move to, and how much money you could free up by downsizing.

Thankfully, it’s simple enough to find out how much property is selling for in your area using a property portal like Rightmove and Zoopla, and you could also use the Land Registry.

When you’re more serious, you’ll want to ask an estate agent to give you a rough valuation.

Can you afford a suitable home in a suitable location?

Of course, your options may be limited by your budget. So once you know how much your home is worth and you’ve taken into account any other money you have access to, you’ll want to start looking around for a new home.

Read our “Best places to retire in the UK” article to get started, and once you’ve a better idea you can start looking at property online using portals like Rightmove or Zoopla. There’s no better way to get to know an area than visiting it in person, so once you’ve found an area you like and can afford, why not take a weekend break in the area?

Will your ongoing costs change?

Every home is different; from the size and layout of its rooms to the quality of its insulation. If you’re moving from a Victorian-era home with large rooms and high ceilings to a modern flat, you might find that your heating bills reduce significantly.

You may also find that your own personal living costs go up or down depending on your planned activities (golfing lessons, anyone?) as well as your health requirements. As much as no one likes to think about it, it’s possible that we might require extra care as we grow old. Things like private home care can be expensive, so this may be worth factoring in depending on your age.

Do you really want to move out of your home?

Moving home is as much of an emotional decision as it is a practical one, particularly if you’ve lived at your current home for many years. Other circumstances can make it difficult to move too - you might have built your home yourself or made significant renovations that might feel like an extension of your identity, for example.

Your home might also be perfectly located between friends and family or it might even have great transport links into town where you enjoy spending evenings at the theatre!

If you have reservations about the idea of moving, there might not be any harm in waiting a little longer to make your move.

The pros and cons of downsizing your home

There are plenty of reasons to downsize, but there are also plenty of things to think about before you do!

Benefits of downsizing your home

  • Free up cash to use during your retirement
  • Pay off your mortgage or other loans
  • It’s easier to manage and maintain a smaller home
  • Running costs should be lower
  • Other bills could be lower (eg. council tax)
  • You might be able to move to a nicer location, even while paying less on a home

Downsides of downsizing your home

  • Moving costs
  • The emotional cost of moving from your long-term family home
  • Leaving friends and family behind
  • You’ll need to adjust to a new lifestyle
  • You’ll need to free up a lot of money to live off it
  • A smaller home might feel limiting

How to downsize (a step by step guide)

If you’re wondering exactly how to downsize for retirement but aren’t sure where to begin, here’s a simple step by step plan.

1. Get your home valued

An estate agent (or two) can give you a quick estimate by visiting your home. The service is complimentary and you won’t be obliged to sell the property with them.

2. Declutter and identify any large items you want to keep

Moving is a great time for a fresh start. So go through the loft and your old cupboards, and start chucking out anything you don’t want to bring with you to your new home.

Don’t want to part with your perfect sofa? Can’t bear to leave that family heirloom behind? Tag them so you don’t forget, and take their measurements so you’ll know if they’ll fit in your new home.

It’s better to do all this before listing your home for sale so that you have plenty of time to get through everything before the viewings begin.

3. List your property for sale and start viewing properties

It doesn’t really matter in which order you start selling your home or viewing properties, since there’s no way of knowing how quickly either process will go. But you’ll want to do both around the same time so that the process isn’t slowed down when you find a buyer or fall in love with your dream home.

Decide your budget from the future proceeds of your home sale (don’t forget to factor in selling and moving costs like solicitors and van rental, for example), and start by looking online for your new home using a property portal like Rightmove or Zoopla. When you find somewhere you like, arrange a viewing and make an offer! Selling and buying might take as long as 3-9 months, depending on the market.

4. Inform your friends and family

Moving to a new area can be an emotionally demanding time, so you’ll want to retain the support of your nearest and dearest. Consider throwing a leaving party or even inviting them to your new home when you move in! You’ll certainly want to give them your new address so you don’t lose contact.

5. Move into your new home!

Now for the fun part. Pack your things, hire that van (or lorry), take a deep breath, and say hello to your new home.

6. Settle into your new community

Depending on the area you move to - and your attitude to being part of the community - consider looking for opportunities to get to know your new neighbours. You could visit the local market or join a town hall meeting, for example. Or you might want to take up some classes with people of a similar age.

7. Invite the family over

When you’re ready and settled in, there’s no better way of staying in touch than hosting afternoon tea. So why not invite the family over? You’ll have plenty to talk about, and they’ll be keen to see your new home.

How to downsize your home quickly

The decision to move home shouldn’t be made in a hurry. But if you’re set on moving and you’re eager to do it quickly, here are some time-savings tips to help…

  • Enroll the help of family or friends to help prepare your home for sale
  • Find a reputable estate agent that has plenty of experience selling similar homes
  • Find a conveyancer or solicitor that’s known for being attentive (this is often the slowest part of the process, so ignore ones with track records of being slow)
  • Don’t be afraid to chase your estate agent or solicitor
  • Prepare your documents ahead of time (for example, a copy of the lease)
  • Prepare a list of needs and wants before viewing properties so you’re confident when you’ve found the right home
  • If you can afford it, buy your next home before selling your current one
  • Hire a moving company to pack your things in half the time

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