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Fool advises against downsizing

Moving in to a smaller home in order to fund your dream retirement does not necessarily make good financial sense, Fool.co.uk said yesterday.

According to the financial website, the average UK property would fund just 16 per cent of the average working income.

However, those living in London and the south-east can take advantage of the area's runaway property prices - and achieve up to 70 per cent of retirement income through moving from a house to the flat.

Andrew Tully, senior pensions technical manager at Standard Life said: "Across the UK many people are pinning their hopes on a continuing strong housing market to provide the retirement of their dreams. The reality is somewhat different.

"Our analysis shows retiring and banking on your main residence to provide a sufficient retirement income is a potential retirement disaster unless you have made sufficient provision elsewhere."

Potential other sources of income from retirees on top of the state pension can be derived from savings, investments and private pension plans.

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