Have you thought about downsizing when you retire? If so, you’re not alone.
 
In 2024, Saga revealed that nearly 1 in 5 homeowners over the age of 50 had downsized, equating to roughly 200,000 people moving to a smaller home every year [1].

The research revealed a variety of reasons people made the move. The most common was a desire to reduce the time and cost of maintaining a larger property, closely followed by the capital they would free up by moving.

Practicalities aside, some downsizers are taking the opportunity to move closer to families, allowing them to spend more time caring for their grandchildren.

Moving home can be an exciting time, but it’s also a huge decision to make if your move is part of your retirement plan.
 
As such, it’s important to think through all the implications before you commit to a move. This is especially true if you’re downsizing to help fund your retirement. 

Here are three important things to consider.

1. Do your sums

It’s important to make sure your move is affordable.

If you’re moving to a new part of the country, or a different country altogether, be sure to check property prices in the area before you commit, so you know what your new dream home is likely to cost.

You should also consider how much relocating might affect your regular expenditure. It's not just the large cost of buying a house, but the everyday costs and smaller spending that may change with your move.

2. Factor in all the associated costs
 
While the total cost of buying your new home will vary depending on the size, value, and location of the property, you’ll need to factor in additional expenses of moving house.

You may need to pay:

• Estate agent fees
• Conveyancing fees
• Survey costs
• Removal costs.

Plus, it’s likely you’ll also need to pay Stamp Duty.

This will cost:

• 5% on the portion of the property’s value between £250,001 and £925,000
• 10% on the portion of the property’s value between £925,001 and £1.5 million
• 12% on any value exceeding £1.5 million.

These costs could reduce the profits from selling your home. 
If your current home has significantly increased in value since you bought it, downsizing may be profitable. However, should you only have a small amount of equity in your home, downsizing may not turn out to be quite so financially beneficial.

3. Talk to a financial planner about how to use your capital to fund your retirement

Once you’ve paid off any outstanding balance on your mortgage and covered all the costs of moving, you need to think how best to save or invest the remaining capital to create a sustainable income throughout your retirement.

There are multiple ways you could achieve this, including:

• Annuities
• Your pension
• ISAs and other investments.

Putting capital into your pension may have some tax advantages, and also allows your money the opportunity to grow over time. This is also true for Stocks and Shares ISAs – that offers tax advantages when you withdraw funds and may offer more flexibility.

You may decide that a mix of investments is the right approach for you. This means you won’t have all your eggs in one basket and could help you to create a flexible income from multiple different sources.
 
Get in touch
If you’d like help working out whether your home could be part of your retirement plan, a Titan Wealth Planner can help you understand all your options. 

We can provide personalised financial advice that takes your circumstances and goals into account and help you understand whether downsizing is the right choice for you. Email info.wp@titanwh.com or call us on 0800 048 0150.

Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
 
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
 
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
 
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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