class=”summary”> According to a recent survey by Mercer Human Resource Consulting’s UK operation, a third of Britons expect to use the money from selling their homes to pay for their retirement, In2perspective reported.
However, when Mercer analyzed the numbers, it found
that an average £173,000 UK house could be sold to buy an
annuity that would shell out £6,700 a year after tax. But
with current average annual rental costs standing at
£6,800, an annuity would provide negative net retirement
The same analysis showed that someone choosing to downsize from an average semi-detached home to an average terraced home would be able to buy an annuity of just £1,100 a year after tax.
“People with expensive houses who will be able to downsize are unlikely to be those who are relying on their homes as their main source of retirement income,” said Deborah Cooper at Mercer, in a release. “For most defined contribution scheme members, selling a home to buy an annuity will provide little income, if any at all, once rental or re-purchasing costs have been taken into account.”