Downsizing for Retirement

Eventually we get to that point in our lives when we want or need to downsize. Often put off for too long, this means getting our affairs in order and making ourselves as comfortable as possible for the rest of our lives. By the time this change comes around we will be older and our children would have all moved out. Now we are faced with some difficult questions: do we retire? Do we sell our houses and live somewhere built for a couple with one guest bedroom, or two? Do we keep the family house and rent it out? These are just a few of the considerations you need to take into account before making a decision. This month’s blog will explore the pros and cons of these, as well as a few extra options you may not have thought of and how to best go about making the best decisions for you.

Do I retire before downsizing?
The answer to this can only be derived by assessing someone’s unique personal circumstances. Some people don’t want to retire, at this age we often work for love, not money. However, the point of downsizing is dependent on how much land your home occupies and how much of that you actually want or need. If you want to have a big piece of land fit for a family when there is only yourself and maybe one other person there… that is your choice. But downsizing could give you more money to enjoy your life with due to reduced maintenance costs and therefore increase the likelihood of retiring sooner.

Why downsize when I still expect guests in my home?
This is dependent on the frequency and number of guests. If you have a three bedroom home and you have two empty rooms that sometimes get filled for a couple of days a year. Empty rooms cost a lot of money, so using rooms for multiple purposes if likely the way to go – have a theatre with a sofa/bed or a study with an extra mattress in the store room. Downsizing doesn’t have to mean reducing the size of your home, it may just needs to be low maintenance and suitable for elderly people – safe & comfortable!

Do we buy a smaller home and rent our old home or sell it?
This depends on your personal finances. If you’re in a position to buy another property and rent your family home then that’s great! If you do choose to rent there might be a need to upgrade your home. If you’ve lived in the same house for thirty years and still have the same stove, you might not get as much rent as you could. This same argument goes for general decor & cosmetics. Updating your home to a more modern fit out will assist in achieving the best return.

How do we decide what is a good downsize for us?
Downsizing doesn’t just mean a smaller home, but a different way of living. If you are retiring and want to be around people of your own age then you might consider moving to a retirement community. Downsizing is completely dependent on what wants and needs you’re looking to get out of your new lifestyle. We would suggest talking to a realtor about what you’re after and seeing what they have available for you. If you downsize into an apartment be sure to talk to an agent about the differences between green title living & strata title living. The variety of choices is endless… you might even rent your house, purchase a caravan and travel the country instead!

So if you’re looking to retire or just downsize in general you should take what’s been mentioned into consideration. A ‘try before buy’ scenario is often helpful for doing research. Try out different types of properties in different locations by renting them out for short holidays. For some people they might choose the family home as the place they wish to spend the rest of their lives in, others might feel that a brand new apartment with hotel like amenity best suits their retirement lifestyle. Consulting with a real estate agent can make the process a lot more clear and they will be able to assist in preparing a plan that minimises the stress & hassle.