Good morning 👋

This week, I’ve been thinking about property and in particular how often it sparks such emotional decisions.

Two of my children are buying their own home and are swapping rent for mortgage payments. It’s a big but sensible decision at their age. They’ve got lots of earning potential ahead of them.

But what about the other side of working life? When you’re in your mid 50s and would like to be working less?

I’ve come across a couple of situations recently…

The first. A couple, not far off the age where work becomes optional, their children have left home. Mortage paid off. You might expect them to be thinking about downsizing.

But no. They have recently put everything into buying a much bigger house. All their spare cash, all the equity, straight into a new property. So the grandchildren can visit.

The second. Someone who has done with working. Has a house worth a lot of money, but almost nothing else. No real savings. A pension that won't go far.

And a substantial interest-only mortgage sitting there, with no repayment plan.

Well, their repayment plan is to downsize when the time comes.

But they don't really want to downsize. They love the house. So they’re stuck.

Two different situations. The same basic problem.

The house has become the plan.

Not a plan. The Plan.

Ask someone in their mid fifties how they're financially placed and within about thirty seconds the property comes up.

What it's worth, what they paid for it, how much it's grown.

I understand it. A house feels real in a way a pension just doesn’t. You can see it, live in it, touch it.

A pension is invisible and complicated and managed by people you've never met.

But the house can only do one thing at a time.

It can be the place you love, or it can be your retirement fund.

It's very hard for it to be both simultaneously.

If you're putting everything into a bigger property in your mid fifties, you're leaving less time for anything else to grow.

And the interest-only question is a big one, especially now that interest rates are higher. The capital doesn't disappear. It just sits there waiting to be repaid.

It worries me, if I'm honest. Too many people tying themselves into property at exactly the age when you'd expect them to be simplifying, freeing up capital, and actually living a bit. Taking the grandkids on holiday. Working less. Having some fun.

The house might well be part of your retirement. For most people it is. But it works best as part of the picture, not the whole of it.

Let me know what you think.

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