Should we use savings to upsize later in life or stay put

[trui]

We’re 53 and 61, mortgage-free in a 1600sqft 4-bed house we’ve lived in for 28 years. It’s a nice home and works reasonably well, but it's on a sloping plot and every room multitasks — dining room is also a library (DH loves his books) and also my home office, and also acts as a corridor to living room and patio; piano is in the living room; DD1’s room doubles as my music room; guest room is DHs home office etc. DD2 is still at home, the other is at uni but likely to keep returning (with boyfriend in tow, and then probably grandkids) for years yet.
We save ~£3–4k a month. Most spare money goes into shares or helping our daughters financially. We’re comfortable and secure, and being mortgage-free gives me huge peace of mind. I know this is a very first world problem.
A beautiful 2300sqft house has come up in our town, which fixes most of the niggles with our current place — flat garden, more space, shorter walk to shops (5 minutes instead of 15). We could buy it outright by selling our current house and using about £200k of savings, but it would reduce our liquid savings to around £60–70k.
On paper, it’s affordable. Emotionally, I’m terrified, sick with terror and sleepless nights, even though part of me loves the idea. My husband was hesitant at first but is now keen.
I can’t tell whether this anxiety is a warning that we should stay put, or just fear of a big life change. Part of me worries we should keep the money accessible to help our daughters onto the property ladder later (but is that just the anxiety talking?). Another part worries we’ll regret not moving, especially as the current house may become less practical as we age (the sloping drive/garden), and then I'll find it even harder (emotionally) to move.

I wouldn't, but I hope to retire as early as I can and spend any money on travel. Different priorities. In your situation I can see there are some practicalities, but if the house is larger, might that become difficult?

What are your pensions and non-accessible savings like? Will you continue to be able to save £3-4k a month for the next few years?

For me, spending time in a house I love with enough space is important as we spend a lot of time at home. You can always downsize in say 15 years time and get a cash boost then. Can you imagine the next 15-20 years in a house which doesn’t really work for you?

On the flip side, if you want to reduce work/travel more and spend less time at home, the cash might be more useful!

it really depends on your plans for the next 10-20 years and what’s more important to you. A house is always an investment though that you can sell if you need more money and less space!

I wouldn't choose to take on a mortgage at the point in my life where I was already mortgage free and looking towards retirement (as well as wanting to financially support my DC). Actually, it sounds like the house just need a bit of a rethink as to what each room actually is. You say you have a music room, but the piano isn't in that room. You have a dining room but your husband has stuck all his books in it and is using it. I'd be looking to rejig each room, repurpose and maximise the space I already have. I guarantee the 2 of you don't need a 2300 sqfoot house, you just need to sort you current one out. I can't say if the sloping plot is a massive problem, but you've lived with the slope for a long time, it can be so bad. I think you've been a bit seduced by the shiny, fresh and modern house. Yours could be just as lovely, I bet.

We did just what you proposed, and we love it here.

We had lived in our home for 36 years and took a leap of faith. The garden was our main issue, but the walk to the shops and bars! swung it for us. We renovated and don't regret our decision. You can always move again to free up capital if required. The extra 200k won't be earning that much interest if it is easily accessible, but if you buy wisely, it could be 'invested' well and 'earn' you more.

Sounds like you have a LOT of stuff. Could you build a garden room or suchlike? Moving is just so expensive, it doesn't seem especially wise to upsize now then downsize in 10 years.
If 4 of you managed to live there surely there is enough room for 2 of you to live there?

What are your pension positions? If you have work pensions, look at converting them into SIPPs to give you more control. Seek financial advice first, of course on feasibility.

Forget about helping your dc for now as you will be able to do so later. My SIPP has doubled in value since Brexit, in spite of taking out £30k pa, so used tax free funds from that to help DC buy a house.
My advice would be to buy the house, but with a mortgage (if you can get one) and while keeping at least £100k aside in easily accessible assets ie cash, savings, S&S isa.

I say this as someone whose DH passed a few months after he retired, so he never got to enjoy the benefit of his life of work. The new house sounds much better suited to your needs.

If it helps to know, I'm retired and remaining in the previously five bed family home that I have repurposed into an office, an exercise room and two guest bedrooms. First DGC is expected soon, so there is room for all.

I have both a tax accountant and a financial adviser.

@Dizzierblonde We don't need a mortgage to buy it, we'd still have 60-70k in savings if we bought it. And, yes, if we don't get this house, we are going to rejig everything here - we could repurpose the bedrooms better, to free up usage of the dining room, I think.
In terms of work and pensions, I love my job, all being well, I want to keep going for many years to come, and I'll probably get pay increases in that time. DH would like to retire at 67, but that's still 6 years of earnings. Our pensions are OK.
@shuddacuddadidnt The SIPPs thing sounds interesting, I'll look into that.
@CheltenhamLady Nice to hear about someone doing exactly what we're thinking, and it turned out to be a good choice.

I'm actually surprised by the answers - I thought everyone would tell me I was mad!

I feel like I'm at a junction in my life now that we've pretty much finished the child-rearing phase (sadly), and I don't want my life to contract. I feel like I've still got an awful lot of living left to do, and I don't want to make decisions about my life with a view to retiring/dying. But then my anxiety kicks in, and I feel like the sensible thing would be to make decisions with a view to dropping dead soon!!
As for travelling, I quite like 1 or 2 holidays a year, to explore somewhere interesting, but always happy to get back home. We rarely spend more than ~10k a year on holidays anyway, which we can comfortably afford, even with a bigger house. DH not into travelling at all, he's a homebody.

Edited to add sharing link to DT article How the ‘u-shaped’ retirement theory can help you plan your income
https://www.telegraph.co.uk/gift/c2b59e7b8f04f70d

Sorry, to see my original comment you will need to click on the edited button, otherwise the link doesn’t make much sense!

I wouldn't.
I don't think you need more space at this point in your lives.
The "double use" of rooms is totally normal - and far better to have spaces that are used than more space that isn't used from week to week.
The sloping drive and garden may become things that are impractical as you age - but having an extra large more expensive house isn't the best answer to this.
Putting your savings into large-sizing your home at this stage means they are not available either for helping your DC onto the property ladder or for your own spending. When do you both plan to retire? Is this money in pension funds or ISAs? It will take you some time to replenish if so particularly into ISAs given the contribution thresholds.

I would advise everybody to stay put until Labour are out in 3 years. It’s too risky at the moment.

Just back to say if you both get employer contributions to work pensions, this could change the SIPP advice.
If both your jobs are secure then Labour being in power doesn't make a difference. What does is an interest rate rise to counter inflation. This would make me do the financials asap and buy asap too.

I'm not dissimilar in age and would definitely move. There are a lot of advantages but the one that stands out for me is the 5 min vs 15 min to the shops. As you become older and less mobile this is a huge bonus. I've seen older relatives get stuck in their home which seemed absolutely fine in their 50s and 60s but much harder later. You mention grandchildren so I'm assuming you're planning to age in place rather than downsize.

What's the risk you're advising everyone about? Please explain

Labour’s nonsensical tax and legislation policies. Nobody knows who the next target is, it just isn’t worth the risk to enter into any big life changing decisions.

I don't think any party can be relied upon not to make changes that could affect people's lives. Surely that is the point of politics?

If you future-proof as best you can, then that is all any of us can hope for.

Would it be your last house move (so it would need to be suitable for decreasing mobility - ie full wetroom downstairs, bedroom space and living space downstairs - flat access into the house and garden, generous circulation in case you eventually need walkers or wheelchairs?

How much is your current house worth, and how much is the new house worth? Will IHT be an issue in terms of house value / savings / pension? Have you considered IHT planning? This may impact upon whether you keep your assets more liquid or not (and able to be gifted to dc over coming years).

I would move. You can downsize again at a later date if you need to. You’ve probably got a good 20 years before you’re going to need to do a bungalow. Even with putting the £200k into the new house, you will still have a lot more savings than most.

Don’t save up all your money so you have hundreds of thousands in the bank at the age of 80 then you die and your kids have to give half of it to the government.

Why so timid at 53??? That’s middle age, not old age. I’d go for it. Much better proposition and you only live once! You will keep thinking about it if you don’t go for it. Just one word of caution: if it’s desirable, you might not be in pole position to buy if you haven’t sold. If you are not even on the market, you might find others are in a much better position and the sellers will go for them.

I would do it in a heartbeat. We are a bit older than you (late 60s and early 70s) and are in the process of upsizing from our current house thst is 2,200 sq feet because we love having space and want to move away from our immediate area. We’ve never saved but have inherited a modest amount in recent years and are happy to put most of that towards the new house, which would leave us with a similar amount of savings to you to last the rest of our retirement. I want to enjoy my remaining years in the house of my dreams, but if we find we can’t afford to stay in the new house, we will has the option of downsizing again. I can’t say that Ive had a moment’s worry about what we’re doing - the only worries have been if the sale of our house falls throwing and how disappointed we would be.

Sounds like you need Kirsty and Phil for a love it or list it re-jig😂

I moved at a similar age to a much more convenient and safer location for retirement, expecting to be on my own shortly (youngest was late teen) chose a small cottage with lovely views but 5 mins walk to all the amenities i could want. Since then middle one has been back twice and youngest never left.🤣 In hindsight if I'd have known I definitely would have gone bigger but location is
perfect and I love the house and area so we squeeze in. Does mean at xmas though i have to find a local air b n b for eldest and partner to stay in as they arrive from abroad, it would be lovely to have a big enough house with en suites to accommodate everybody as their family's grow.

I know I'm probably an unusual case but times and circumstances change, late 60s now and never lived alone. I think 60-70k is a sufficient safety net of savings as similar to me and I haven't touched it despite only having small pension on top of state, but I'm not keen on fancy holidays as I love being at home. I do think being in a home you love as you get older is important as you spend longer in it when no longer working!

That’s true, but with Labour it’s very targeted.. farmers, independently education children, employers, landlords, graduates, people with private pensions, pubs..if you get added to that list of targets then life can be very uncomfortable for you. Housing would seem a likely target and they might even be more spiteful given this weeks local election results. It’s just my opinion, but I’d wait until they’re out before doing something like moving house, starting a business or a new job.

We did similar to you OP.

Mortgage paid off, perfectly nice house in a quiet village but we knew we would not be stopping there into our retirement (lived in that house 31yrs).
Later-50's, we used savings to move to a larger house in a different (more expensive) area. The location is one that we both wanted to move to but work commitments meant it was not possible at that time.
I am sure some people may wonder why we did it but it suits us.

So many people on MN talk about downsizing in later life (although I have never heard anyone talk about it in RL) but we prefer a bit of space & room to move around.
None of our friends or family have any intention of moving/downsizing in later life, instead they are (like us) making sure their houses are ready for the future.

@Nourishinghandcream People only ever downsize to free up cash, but we're in the opposite situation. No one ever downsizes just because they want a smaller house.

@BusySpinningPlates Current house is 450k, new house is 650k, I don't think there will be an IHT issue, especially if we keep gifting money to our DDs.

@MeetMeOnTheCorner We thought we had missed out, but the "cash" buyers, who put in an offer over the asking price, have pulled out. The estate agent rang to ask if we were still interested. There are other people interested though, so still might not happen, but it's been interesting to get people's thoughts.