Anyone planning to downsize and use equity to fund retirement?

[DFOD]

We are 55 - have minimal private pensions but will have significant equity from property when we retire at 65 and downsize.

Whats the best way to invest / protect this equity to provide an annual income in retirement and how much equity would you need to provide an income or £25k/annum (which would be on top of state pensions).

To draw down at 5% you would need £500,000

4% £625,000

3% £750,000

2.5% £1,000,000

Supposedly 3% is safe enough for most peoples retirement life expectancy, but may run short if you age very well. If your health is such that you expect to die sooner you could draw down faster.

Do you need the £25k to be post tax?

If your 55 I think your state retirement age is 67 😐
I'm younger I reckon I'll be nearer 70 which to be honest is just depressing!!!

But in terms of an income of £25k do you mean sell up and then buy something smaller and invest the money in another property to rent/ business venue/ stocks and shares??

My auntie and uncle sold their big house and bought a bungalow to live in and then an apartment with the money and rent their apartment out but get £850 a month for it but have no mortgage themselves but that is nowhere near £25k a year but boosts their pensions.
It might be worth speaking to a financial advisor and getting some ideas as to what might work best.

Thanks this is helpful. Yes £25 post tax.

What do you mean draw down? From where? Just the bank or do you buy an investment scheme / annuity / pension?

Sorry I am really not up to speed with the terminology.

Yes this is the plan buy something smaller, easier to maintain and cheaper to run in a cheaper area…..don’t want to be a LL though or have capital tied up property that will need selling down the line - but maybe that’s a good way to invest some of the capital?

@DFOD
Auntie and Uncle went doe that option as generally house prices go up
The apartment they bought is a McCarthy Stone retirement apartment, you can be independent or there is staff on hand and the idea is that eventually when the bungalow gets too much they will move there.
They are in their 70's now so maybe in 10 years or so or if someone happens to one of them
They rent the apartment via the McCarthy Stone group as lots of older people aren't in a position to buy and there are ques of people wanting to rent them x

A well spread selection of stocks and bonds. If it’s in a pension scheme you don’t pay tax on the growth, money outside a pension is much less tax efficient. Remember annual and lifetime allowances make it hard to move large amounts of money into a pension quickly. You need to do the sums for your circumstances but you may need to downsize significantly before retirement for best tax efficiency.

I think you need to be seeing a financial advisor to plan this out.

You need to see a financial adviser to discuss your plans.

We’re thinking of doing that now at 54.
your a long time dead and we don’t want to be the richest people in the cemetery.
to put a note on this we have no kids so it would just be family picking over the estate left.