If you’re “asset rich and cash poor”, you might well be tempted to consider releasing capital during retirement by moving. But while it can work for many people, it’s a route that needs to be carefully calculated first, writes Tony Watts OBE.

It will come as no surprise that, for a large chunk of the UK population, their biggest single asset is their home – especially those who were able to purchase at a time when house prices were relatively affordable.

That can make it tempting to consider releasing capital from your home a part of your retirement plan – especially if your pensions and savings aren’t going to give you the lifestyle you want, or you find yourself with a house and/or garden that’s expensive or hard work to maintain.

But it’s well worth doing some serious homework first.

First, there’s the cost: a recent report by the price comparison site Reallymoving shows that the average cost of moving has now reached £11,777, once you take into account the newly restored Stamp Duty, estate agent and legal fees, surveys and removals. On top of that you may also find you need to spend money on redecorating or buying furniture and/or white goods to fit your new abode.

Then there are the emotional ties we have to the home in which we may have raised our family. Another recent survey (this time from Hargreaves Lansdown) reveals that only one in five say they plan to downsize in their retirement, with the most popular reason being that they are “too attached” to their home.

Another sound reason to stay put is that many of us want to remain local to our existing communities and support network, which can become even more important later in life… so if we can’t find somewhere close to hand to move to, it can be a real pull.

And, of course, it can sometimes be difficult to declutter our lives to the extent that we can move into a smaller abode.

So when IS it a good idea to move?

I’ve run a whole series of workshops on later life living over the years, attended by people either in or heading towards retirement… and some key themes have unfolded. Primarily: look at your decision in the round – in other words, make the move not just about the money but about the differences it will make to your future life. Consider what impact your new home will have on your social life; and take into account your ability to access vital services in later years when you may not necessarily be so mobile. A cottage in the country with roses round the door is a different proposition if it’s on a steep hill, or miles from a shop or surgery when you no longer drive.

Moving can also be a significant benefit if you’re going to have family close at hand where you can provide childcare and/or they can keep an eye out for you. That said, I’ve known people who have done just that only for their family member upsticks to change jobs…

Downsizing is also a consideration of you’re keen to help a family member financially… but do bear in mind the impact it will have on your finances in the future… you can only downsize so many times.

Trading in a large family house that’s expensive to heat and maintain can also be a really sensible move. And if you are one of the many people who are now reaching retirement not having paid off their mortgage, and worried about servicing future payments, downsizing would be one solution.

If, after you’ve done your sums and think you will have a lump sum that will help you fund your retirement, do consider how best to invest that. And also remember that, if you do have savings, that could limit your ability to claim certain benefits in the future.

Are there other options?

One other possibility is a lifetime mortgage: a form of equity release which is effectively a loan secured against your home that allows you to release tax-free cash without needing to move. Available to homeowners aged 55 or over, you can take the money as a single lump sum or as series of lump sums. You won’t make any repayments until you die or move out of your home and go into long-term care.

Like all forms of equity release, you do need to consider the total cost over the course of your lifetime as interest will accrue, and especially if are keen to pass on an inheritance to your family. Always take independent advice before going down this route, and letting your family know your plans can also be a good move in some circumstances.

Another option is a Retirement Interest-only Mortgage (Rio), where the homeowner remortgages their property, but only services the interest element. Again, this can reduce monthly outgoings, and again only needs to be repaid when the homeowner dies or goes into care.

Remember: any form of releasing capital from your home will, of course, reduce your ability to move down the line.

What next?

If you’re considering one of the options above, you can make use of your RetireEasy LifePlan to run some different scenarios to see the effect on your income and assets throughout your retirement – including a lifetime mortgage function – helping you to make a more informed decision.