Should You Downsize During Retirement

22 September 2016

Something that we all have in common is that we can’t control time. When we arrive at retirement age although it’s a time for us to relax and enjoy our twilight years, it can be a stressful time for a lot of people who haven’t planned ahead.

Planning for retirement

Planning for retirement can be a daunting task especially when you consider all the advice out there on the subject. Ultimately financial planning for your retirement cannot be avoided and the sooner you begin to prepare, the better.

When making decisions about retirement investments, tax minimisation and superannuation, it’s also a good idea to consider your living arrangements and how you will fund your desired lifestyle.

A major decision that retirees will inevitably have to make is whether they will stay in the family home or purchase a smaller dwelling.

According to statistics, downsizing among retirees is a growing trend, with one in four people between the ages of 55-64 moving to smaller properties. This trend is expected to continue as more people in this age group retire.

We are also likely to see an increase in demand for housing for retirees looking to downsize. Most retirees prefer villas, townhouses and units over stand-alone houses because they are easier to maintain.

Another trend that has emerged is higher prices for these smaller units in certain locations. In fact in some places, a villa can cost as much as a three bedroom house.

Why plan ahead?

It’s a good idea to begin planning ahead during those pre-retirement years when most homeowners are holding substantial equity in the family home. Around this time prior to retirement most people also have fewer financial commitments as their children leave the nest. It’s a good time to think about using the equity in the home to purchase a retirement abode.

By purchasing a property in the years leading up to retirement, property owners can benefit from rental income as well as tax cuts, which will ultimately help fund the property.

After purchasing a home to reside in during retirement, you can review your financial situation and desired lifestyle before deciding whether to sell the family home or keep it as an investment.

The Benefits of Scaling Down

As we move into our retirement years, we may want to cut down on our responsibilities, especially those that require time and effort such as maintaining a large property. Many retirees find themselves moving to smaller homes that are easier to maintain or closer to family and friends.

Others find that retirement is the perfect time to travel and love the convenience of being able to lock-up-and-go on a whim.

Getting rid of the family home can also provide capital for other investments that may provide a source of income in the future or release money to fund a traveller’s lifestyle.

Selling the family home could also help you avoid alternative equity raising options such as a reverse mortgage on your current property.

Deciding to put your family home on the market could ultimately provide you with the way of life that you envision for your retirement.

If you’re still unsure, here are some points to consider before selling your home:

  • Understand your reasons for selling. Don’t just consider short term needs – factor in potential long-term needs.
  • Explore ALL the implications of selling your house – financial and otherwise.
  • What are the advantages to YOU? If you’re moving to be near family what will happen if they move elsewhere?
  • Smaller isn’t always cheaper. Explore all the costs of moving and maintaining a new home. Will you be ahead?
  • Have you sought financial advice? How will funds from the sale of your home affect your assets and income tests? Will selling impact your age pension?


But there are many more considerations than just financial ones! Importantly, you should also consider the protection of your various assets, and Estate Planning, so that in the event of your death, your assets are allocated according to your wishes.


What next?

Every person’s situation and estate planning  is unique and we have the expertise to help navigate any complexities that exist or could arise.

Contact Gill & Lane Solicitors at Sandgate via, or 3269 8111 for a free, no obligation consultation.

Image courtesy of Ohmega1982/