Don’t want to downsize? There are many other ways to boost your retirement savings, from holding yoga classes at your home to renting out your driveway.
Carriage clocks and games of bowls, grey pounds and silver surfers – today’s retirement is far from what these stereotypes portray. Instead, it is more varied – bungee jumping, lunches with friends or new hobbies are all things that you might have in your retirement plans. But with pensions smaller than those in the past, using your home to provide an extra bit of funding could be a big win.
For many, that might mean downsizing into a smaller property, which can be a great way to free up cash for retirement. But what if you don’t want to leave the home you love? What other options can help you to use your home as an income instead?
Join the digital B&B revolution
The short-term rental market has become filled with privately owned spare rooms and converted attics. A number of websites now allow homeowners to become private landlords by listing their spare space for short-term rental use.
Your earning potential will come down to several factors, including demand, your running costs and any relevant legislation. Some sites limit the number of nights that a space can be leased, to protect the long-term rental market. However, anyone with spare, unused space who is willing to open their home to tourists could quickly begin making extra money.
Storage or parking space
Even if you don’t have a spare room suitable for short lets, you could still make a little on the side from your spare parking or storage spaces.
In areas where parking spaces are highly regulated or in short supply, people will pay a premium to cut down their commute. If you live near a busy train station or town centre, you could make up to £200 a month from your garage or driveway.
Start a business or work from home
High-speed broadband has boosted connectivity, allowing many people to run businesses from their sofa or kitchen table. If you’re not able to start your own business just yet, it might still be worth discussing remote working with your employer. Working from home is accepted by a growing number of companies and by avoiding the costly daily commute, you could save a tidy sum on travel.
For parents of young children, this could also help cut childcare costs, making working from home a great way to increase disposable income.
Or, if you’re approaching retirement, scaling back at work to either part-time or remote-working only could help to extend the time that you’re still earning a traditional salary. One in 10 over-65s are still working, many of whom will be part-time employees, so it might be worth considering a small job on the side as you move into retirement. This could help make the transition into life after work smoother, and you’ll also have more money to enjoy the retirement that you want.
Yoga or spinning? Good health and personal well-being are on the minds of many people today, prompting them to look for cheap and local classes to join. So, if you’re someone with the skills to run your own classes or space to hire out, you could begin generating additional income from health-conscious visitors in no time.
Unlock your hidden pension
If you’re a homeowner over the age of 55, lifetime mortgages (a loan secured against your home) offer a way to unlock your housing wealth, so that you can put it to use for the retirement that you want to lead. Britain’s over-55s hold a staggering £1 trillion in housing wealth. People are now turning to the “pension they never knew they had” as they face the challenge of making their retirement savings last. Some are even using the money to pay for holidays or to gift a living inheritance.
Lenders in this sector are now offering much greater flexibility when it comes to how you can unlock housing equity. Rather than borrowing a large lump sum, new solutions mean that you can now access your property wealth as a regular income paid over a fixed term, with an initial lump sum, which could sit alongside other options such as annuities or investments.
A lifetime mortgage is repaid upon the sale of the property after death, or when the last surviving borrower dies or moves into long-term care. Interest is charged on the loan plus any interest already added, which means the amount that you owe can grow quickly. A lifetime mortgage will reduce an inheritance.
To take out a lifetime mortgage, you’ll need to speak to a financial adviser. They’ll help you to understand what’s involved and how much equity you could release from your home.
Harold Pritchard is distribution director at Legal & General Home Finance.