More than a quarter of British retirees are likely to downsize in order to fund the rest of their retirement, research published by Prudential reveals today.   

The study shows that 73 per cent of the UK’s 10.4 million pensioners own their property and that 26 per cent of them are planning to sell up so they can afford the retirement that they had anticipated.

The average sale, according to the report, is expected to raise about £62,000.

Prudential retirement expert, Stan Russell says: “Housing wealth is potentially a significant source of additional retirement income for pensioners who own their own home.

“For some retired homeowners, moving to a smaller home is a lifestyle choice, but for a significant number the decision is a financial one.  Our research also shows the financial nous of many pensioners – the majority of retired homeowners expecting to sell their property plan to buy a smaller home rather than rent, saving themselves on average £168 per month on the difference between average mortgage and rental costs.”

In my opinion, these finding are extremely concerning as they highlight how a significant proportion of the population are assuming that equity in their property will be able to ‘paper over’ any flaws in their finances during their mature years.  This is a naïve way of thinking as there are so many variables in the property market.

It is the same mindset that assumes that older people can carry on working into their 70s to fund their retirement – but what happens if they are unable, physically for example, to continue at this age? Or they can’t find an employer who is willing to take on someone in their 70s?

Prudential’s research underscores deVere’s consistent message the best way for people to secure the retirement they want is to start saving as much and as early as possible, and to explore the available retirement planning opportunities with an independent financial adviser.

As advisers it is part of our job to share with people the stark choices they might have to face should they fail to adequately plan their finances.  A failure to implement a sound financial plan that will allow the main objectives to be reached will, unfortunately, likely result in lifestyle compromises when you come to retire.

Nigel Green