As our population continues to age, Downsizing has become a very hot topic and one that some would prefer to ignore. If you find the thought of packing up and moving to a smaller home a little overwhelming you are not alone.
From our experience, those who have made the move say they are very happy they did so. They feel more empowered and have more freedom to live life on their own terms. But is Downsizing REALLY worth it?
When it comes to Downsizing, there are actually two types. Deciding which category you fall into is the first step:
- Physical downsizing:
A. Where your home has become too difficult and costly to maintain,
B. there may be too many stairs,
C. the home is too large for just you by yourself,
D. you’d prefer something smaller with less maintenance. - Financial downsizing:
A. Where your next home costs less than the value of your current home,
B. you can release some equity which can be contributed to your superannuation,
C. Free up some money to invest so you can enjoy your retirement.
A combination of the above is also quite common, however it is important to note that depending on the type of property and location you would like to move to, it’s not always possible to release equity. We often see retirees downsize from a physical aspect, however financially, the changeover may be a similar price point or sometimes even more!
This is why we highly recommend careful consideration be given to your next move. If the cost is like for like then the move is most likely more of a lifestyle or comfort choice. If releasing equity is important, then perhaps moving to a regional area or an apartment might be the best option.
If socialising is your thing and you enjoy spending time with like-minded people and sharing in activities and social events, then a retirement village would be ideal. Regardless of where you move to, don’t forget to investigate the ease of accessing care and support to stay independent for as long as possible.
The Australian Government sees the importance of downsizing as a way to use housing stock more efficiently, with downsizers reducing the number of bedrooms in their dwelling and freeing up larger dwellings for young families. By way of encouragement, they have introduced the Downsizer Contribution Scheme. This allows you to deposit up to $600,000 for a couple ($300,000 for a single) as a non concessional contribution to your Superannuation from the sale. There are a few pre-requisites such as a minimum of 10 years ownership of the home and minimum age is 55 years. Click Here to find out more – Downsizer Contribution Scheme
There is much to consider and understand when it comes to downsizing which is why it is not uncommon for people to start planning a number of years in advance before making the final move. Speaking to a qualified financial planner is always a good idea so you have a clear understanding of how it will affect your own personal financial position.
If you’ve had enough of the ‘rat race’ and looking for a more relaxed lifestyle or if your home is simply to much work to maintain and you’d like to live closer to the grandchildren, then perhaps downsizing really is worth the effort. After all, they’re not called our “golden years” for nothing!
If you would like help with preparing your home for sale, choosing the best real estate agent or some general advice around downsizing, please BOOK A CALL with our Sydney Vendor Advocates by clicking this link.
