Standard Life: don’t bank on downsizing

According to Standard Life, retirees who choose to downsize their property in order to free up capital may not benefit as much as they expected, particularly in the aftermath of the economic downturn.

The company’s research shows that, on average, downsizing a home in the UK will provide only £43.50 a week in retirement income compared with £53.40 in 2008. Standard Life found that moving from a detached house to a bungalow would potentially translate to £71 in retirement income a week, compared with £100 in 2008, while moving from a semi-detached home to a flat is only likely to free up £4 a week.

Andrew Tully, senior pensions policy manager, Standard Life, commented: “People pinning their retirement dreams on downsizing their property will be in for a shock.  A combination of a fall in house prices and annuity rates has dealt a double blow to many, with the average pension pot from downsizing only providing £43.50 a week income. Banking on downsizing to generate sufficient income is a potential retirement disaster unless you have also made provision elsewhere.”

He added that other options—for example pensions, savings accounts and equity release - could be better ways of generating retirement income.