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The family home can sometimes be seen as a pension in itself. Some feel you should use any extra funds you have to either buy a larger home or improve the one you have.

The idea is that you can sell your home when you retire and then live off the proceeds of the sale. It is likely if you have owned the home for many years that its value will have increased.

You will most likely have your mortgage paid off by the time you reach retirement age so the full proceeds of the sale would be yours. Remember you would need to downsize or organise alternative accommodation.

While this can work in some circumstances there are many factors that you should consider before choosing this as an option. This can be a very risky decision.

Factors to Consider

Pension: The Family Home

Many people love their homes. Especially if they have had the funds to create the home of their dreams. If you use your home as your pension fund then you have no choice but to sell your home when you retire.

As you will be downsizing is there going to be a suitable alternative available in your area? For example, if you live in a four bedroom home with a large garden you probably won’t want to move to a one bedroom apartment with no garden.

Most towns and suburbs are becoming overcrowded with no sign of the property shortage going away. It is not unreasonable to think that a suitable alternative accommodation may not be available at the time.

Your family home holds memories of a life lived with the ones you love. Will you really want to leave it? even if its only nostalgia holding you back.

Knowing you HAVE to sell your home may upset you greatly in later life and you may feel forced out of your family home. Sometimes one spouse or both will not want to sell and this causes many issues.

Pension: The Family Home & Your Children

Do you know someone who’s adult children still live with them? Today’s property market has made it difficult for young adults to get on the property market.

I’m not saying it can’t be done but it is certainly not easy. So what age will your children be when you retire? Are they still going to be living at home with you?

If you need to sell to retire it leaves the family in a very difficult situation. Do you continue to work to provide a home for your adult children OR do you sell up and take retirement at the age you planned.

It is not a decision I would like to have to make. You may not be in a position to help your children to get on the property ladder. You may appear wealthy when the sale goes through but you need the money to last your entire retirement.

I don’t envy anyone left with the decision to make their children and sometimes their own grandchildren homeless just to take the retirement they have worked for life to earn.

This to me would be the largest drawback that comes with using your family home as a pension. There is no way to know how much or little your family will need the home when you want to retire.

Property Prices

You know that property prices change all the time. What would happen if you wanted to retire during a recession?

Let’s say you are let go and there is no other work available. You effectively have to retire. The property value of your home is probably the lowest it has been for some time but you have to sell

You could lose 50% or more of your pension fund. Not a dice you would choose to roll I’m sure.

Or maybe the market has fell off a cliff but you want to retire. You realise at these prices you don’t have enough in your fund to retire. You may have to keep working and delay your retirement.

What if you had to wait an extra five years to be able to retire? This is why using your family home as a pension is risky business.

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