28 July 2022
Downsizing in retirement is increasingly becoming a necessity for many as the cost-of-living crisis starts to bite and workplace pension plans become less generous. With uncertainties over a potential recession, should you wait before moving into a smaller home or could now be a great time to downsize and make the most of your money?
It can be a daunting prospect to think about selling the family home, however it is a decision that many decide is the right choice for them once the kids have long moved out and maintenance seems too onerous or costly.
Ammo Kambo, financial planner at wealth manager Brewin Dolphin cites various factors that should influence your thought process:
“In the current market, properties are at their highest prices ever historically, up 12.8%1 in the 12 months leading up to May 2022, so whilst you may be pleased with the amount you get from the sale, you will also be purchasing your new home amidst astronomical prices”.
“Location is arguably the most important factor to consider carefully in your decision to downsize. It’s crucial that the house you choose is fit to grow old in and is near all the amenities you might need, such as GPs, shops and family members”.
“Making the choice to downsize is a monumental life decision that can be unnerving to think about, but it can also provide a large boost to your retirement fund. Deciding on the right time to downsize can also be difficult, but the process is often easier if not left too late”.
If you’re going to be freeing up large amounts of equity, Ammo’s advice is to invest, but keep an emergency fund.
“Buying a smaller, cheaper property will most likely leave you with equity left over, which could help supplement your retirement for some time if invested as part of a diversified portfolio. It also means you can be a cash buyer, giving you more options, a faster purchase process and the ability to live mortgage free. It’s worth noting that you should also aim to keep six months of expenses in cash for any unanticipated costs, as well as any ad-hoc expenses associated with the move”.
The value of investments, and any income from them, can fall and you may get back less than you invested. Neither simulated nor actual past performance are reliable indicators of future performance. Information is provided only as an example and is not a recommendation to pursue a particular strategy. We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. In addition we reserve the right to act as principal or agent with regard to the sale or purchase of any security mentioned in this document. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
PRESS INFORMATION
For further information, please contact:
Richard Janes richard.janes@brewin.co.uk / Tel: +44 (0) 20 3201 3343
Siân Robertson: Sian.Robertson@brewin.co.uk / Tel: +44 (0) 20 3201 3026
Chloe McFarlane: chloe.mcfarlane@brewin.co.uk / Tel: +44 020 3201 3490
Payal Nair payal.nair@brewin.co.uk / Tel: +44 (0) 20 3201 3342
NOTES TO EDITORS
About Brewin Dolphin
Brewin Dolphin is a UK FTSE 250 provider of discretionary wealth management. With £51.7* billion in total funds, we offer award-winning, personalised wealth management services that meet the varied needs of our clients including individuals, charities and corporates.
Our services range from bespoke, discretionary investment management to retirement planning and tax-efficient investing. Our focus on discretionary investment management has led to significant growth in client funds and we now manage £45.2* billion on a discretionary basis.
Our intermediary business manages £17.0* billion of assets for over 1,700 advice firms either on a discretionary basis or via our Managed Portfolio Service, the MI Brewin Dolphin Voyager fund range and Sustainable MPS.
In line with the premium we place on personal relationships, we’ve built a network of 33 offices across the UK, Jersey and Republic of Ireland, staffed by qualified investment managers and financial planners. We are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients’ needs at the core.
For more information on the recommended cash acquisition of Brewin Dolphin by RBC Wealth Management announced on 31 March 2022, visit: www.brewin.co.uk/RBCoffer
*as at 30th June 2022.
Brewin Dolphin is authorised and regulated by the FCA (Financial Services Register reference number 124444).
The value of investments can fall and you may get back less than you invested.