Two thirds of people plan on staying in their home after retirement

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Posted on: 29 October 2019 by Mark Burns

While there may be a popular image of new retirees happily downsizing from their oversized and empty family home to go and enjoy a new place “by the sea” or in some other such pleasant location, the actual statistics (from Canada Life Home Finance) show that this is true in only a quarter (24%) of cases.

By contrast two thirds (69%) of adults plan to stay in their family home throughout their retirement, a figure which has increased by 5% in the three years since the last survey was undertaken (in 2016).

The reasons for staying put

It’s unclear what exactly has fuelled this change, but it would probably be fair to assume that it is a combination of practical factors and emotional ones.

On the practical side there are “macro” issues such as the challenges of finding a suitable property investments to downsize to and the costs involved with doing so, especially with stamp duty at its current levels (plus the fact that the so-called “investor surcharge” has to be paid by people who buy a new home prior to selling their old one.

This can be recouped at a later date, but, of course, this does involve some degree of hassle).

There are also “micro” issues, connected to the fact that modern retirees often lead very busy lives and may have very similar levels of responsibility as adults of working age. For example, they may be continuing to work in some capacity and/or looking after grandchildren.

On the emotional side, they may simply prefer to stay in their family and familiar home with the support of the network of local friends they have established over the years and within their existing community and geographic area.

Some of these issues may change over the years, e.g. if the government takes action to make it easier (and more cost-effective) to downsize, but the trend of active retirees needing the same sort of facilities and amenities as working-age adults looks set to continue for the foreseeable future.

The practicalities of staying put

In theory the biggest practicality of staying put is giving up the money you can potentially save by downsizing, but in practice, at the current time at least, that is a very variable point.

People moving from big cities to “a life in the country” might release quite a bit of equity in their move (although they would have to be very confident about their desire to make such a big lifestyle change) but people moving from a larger home to a smaller home in the same local area are unlikely to pocket the sort of profits which can make a meaningful difference to a person’s retirement, especially not after all moving costs.

In reality, therefore, the biggest practicality of staying put is often the need to make sure that your house is suitable for your needs as you age (and typically become less mobile). This may require making (and hence financing) adaptations to your property.

Additionally, there is the general need to ensure you have enough funds to enjoy your retirement. It is therefore hardly surprising that equity release is proving to be a popular option with modern retirees, especially since the market now offers a wide range of options for implementing it in a cost-effective and flexible manner.

For more information or to browse a wide range of buy-to-let property for sale, please contact Pure Investor.

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