Positively downsizing
Downsizing is often associated with giving up space, but what if it’s actually about gaining opportunities?
Embracing the idea of downsizing can open the door to a host of benefits, especially if you’re planning for retirement. In fact, a right-sized home might be the key to unlocking new adventures and possibilities that could reshape your retirement in ways you hadn’t imagined.
A rightsized home for your lifestyle
As you look ahead to retirement, it’s essential to ask: How do you want to spend this phase of your life? The answers may surprise you.
For many Australians, travel tops the list. In fact, a study from Equip Super found that 71 percent of retirees plan to prioritise seeing the world when they leave the workforce.
But what if your current home doesn’t fit this lifestyle? A large, empty house can become a burden when you’re on the move, potentially worrying about security and maintenance while you’re away.
Downsizing to a more manageable home, such as one in a gated over-50s community like Living Gems, means you can lock up and leave with peace of mind, knowing your property is well-cared for, all while avoiding costly house-sitting services or leaving the place vacant for too long.
A better location
Downsizing isn’t just about reducing your domestic footprint; it’s also about expanding your options for where to live. The flexibility to relocate means you can choose a community that better aligns with your interests and needs in retirement.
Perhaps you’ve dreamed of moving to a friendly country town, or maybe a life by the beach is calling your name? Or, maybe downsizing lets you move closer to your children or grandchildren, allowing you to spend more time together, while still maintaining your independence in your own space.
Less maintenance
Let’s face it — household chores are never fun, and dealing with constant repairs and the upkeep on an older home can quickly eat up your free time.
Did you know that homeowners should budget about 1 percent of their home’s value each year for repairs, and this figure increases to 4 percent for homes that are 30 years old? For the average Australian home, that could mean setting aside more than $30,000 annually just to keep the property in top shape!
By downsizing to a modern, low-maintenance home, you can save not only money but also valuable time. Imagine moving into a “turnkey” home — one that’s ready to go without the need for constant maintenance, giving you more freedom to enjoy life on your terms.
Reduce the cost of living
Homeownership is expensive—and it doesn’t stop once the mortgage is paid off. Utility costs continue to rise, with electricity prices in Australia jumping by 14 percent in 2023 alone. Plus, council rates, insurance, and maintenance fees add up quickly.
Downsizing to a smaller home or a retirement community with eco-friendly features like solar power could significantly reduce your ongoing expenses. This move may even lower your insurance costs and provide more predictable living expenses, leaving you with more disposable income for what matters most.
Adding to your retirement nest egg
Not only can downsizing lower your cost of living, but it could also boost your retirement savings. The Federal Government’s Downsizer Super Scheme allows you to invest up to $300,000 from the sale of your home into your superannuation, free from additional tax penalties.
This program lets you grow your super savings without exceeding the contribution caps, making it a smart financial move as you prepare for retirement.
Getting ready for the three stages of retirement
Retirement unfolds in three distinct stages, and downsizing at the right time can help you make the most of each one.
- The adventure stage (first decade): Travel is often the top priority. A smaller, secure home in a community with lock-up-and-leave options gives you the flexibility to hit the road without a care.
- The leisure stage (mid-retirement): After tick-marking bucket-list items, your focus shifts to socializing, hobbies, and shorter getaways. A downsized home in a community with plenty of activities can keep you engaged, active, and socially connected.
- The comfort stage (late retirement): In your 80s and beyond, you may need additional support, and living in a home designed for accessibility can help. Look for a community that offers services and features that let you age in place with dignity and independence.
