The Dangers of Relying on your Home as a Retirement Nest Egg

Nest-EggNew research from Royal London shows that those of working age who are planning to downsize to fund their retirement could see their annual income drop by half.

1,500 people were surveyed, looking to downsize from an average property value of £310,000 (detached) to £197,000 (semi-detached). By using the proceeds of the sale to purchase an annuity, this would make an annual income of £13,700 including state pension. Given that the average annual wage for a full time UK worker is £27,400, there would be a sizable slump in standard of living.

According to Baring Asset Management, up to 3 million people are planning to use this approach to fund their retirement. There are also barriers to downsizing which homeowners should consider, such as a low supply of housing to move into, and also older children who are not ready to move out yet.

Bank of England Maintains the Base Rate at 0.50%


Despite market expectations of a decrease in the Base Rate, the Bank of England’s Monetary Policy Committee haveBANK-OF-ENGLAND_2129155b announced they will keep it at 0.5%

Only one Bank of England’s policymakers voted to cut interest rates to 0.25%, while the other eight members of the MPC voted to leave borrowing costs on hold until August.

In the wake of the UK’s vote to leave the EU, Bank of England governor Mark Carney stated monetary easing could take place over the summer and hinted at possible changes to the base rate.

The rate cut would have seen borrowers on base rate tracker mortgages end up better off, while several lenders already increased rates on tracker mortgages ahead of a suspected change.