If you downsize in retirement, you reduce home maintenance, increase cashflow and prioritise lifestyle. However, research indicates only a small percentage of retirees take advantage of downsizing. It’s a real missed opportunity.
In this blog, we’ll explore why you should downsize in retirement and the risks of staying in the family home. We will also take a quick look at some common downsizing options.
Here’s what we will cover:
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Why downsize?
— Avoid maintenance
As you age, the family home can become harder and harder to maintain. Before you know it, what once was a great asset becomes an overwhelming burden. This is especially true if you are an empty nester, have a backyard/pool, or have an especially large dwelling.
Downsizing frees you from home and garden maintenance, leaving you with more time to pursue work and leisure.
— Access equity and increase cash flow
Not only is it hard work, but the family home is also generally a retiree’s most significant asset. As a result, your money is tied up in it and is inaccessible.
Selling, downsizing, and using leftover equity to make retirement more comfortable is a good option for those who feel they don’t have enough money to retire on. It’s also a great way to eliminate mortgage debt if you have any remaining.
— Prioritise convenience
Rather than a downgrade, downsizing is a reset. It’s a powerful opportunity to choose a new homewith your retirement in mind. It’s very common to downsize to a single-level home with a floorplan that’s easy to navigate.
Finally, think about proximity to public transport, shops, medical centres, health clubs and community centres. This is particularly critical if driving becomes difficult.
Popular options to downsize in retirement
Below you will find a quick summary of the most common options for downsizing in Australia. While the list is by no means exhaustive, it’s a solid starting point.
Apartments and townhouses: Relocating to a smaller dwelling near public transport and amenities is popular among younger retirees. It’s all about lifestyle and flexibility.
Retirement villages: These are small, well organised communities that thrive in both regional or more urban settings. Residents live independently, coming and going as they please.
Land lease: Growing out of permanent dwellings in caravan parks, in a land lease you own your home but not the land it sits on. For use of this land, you pay weekly rent to your community operator.
Interested in downsizing? For a more in-depth look at your options, check out our downsizing options blog.