Critical Factors To Consider Before Downsizing
A recent survey (Australian Housing and Urban Research Institute (AHURI)) revealed that 43 per cent of Australians aged 50-59 have moved to a smaller dwelling or different location as they approached retirement as compared to only 3% in the early 2000s. Further research (Property Council of Australia) indicates that downsizing to a smaller home can extend people's capacity to live independently, delaying or reducing their need for formal care or support.
Consequently, the 2017 Budgets have provided for some concessions for eligible seniors, allowing them to sell their homes and invest up to $300,000 per person, into superannuation to encourage downsizing which is believed to lead to a happier and healthier lifestyle. Before making this major decision, here are 9 pertinent questions to carefully examine:
- Does house maintenance wear you down and feel more like a chore? Can you comfortably manage your daily routines around the house?
- Have you considered how the extra cash asset in the proceeds from your home will affect your superannuation in the age pension asset test?
- Have you weighed all your expenses? Consider your expected income, mortgage, rent payments, property taxes, relocation costs, renovation costs to improve aesthetics or improve the property for age-ing purposes. Examples of home modifications include larger doors for wheelchair access, ramps, removal of trip hazards, flooring replacement with carpet or anti-slip tiles.
- How accessible are stores, cafes, restaurants and social activities for you?
- Do your close family members have the peace of mind that you are safe?
- Considering financial and operational maintenance burdens of a larger home, will reducing expenses and releasing equity create greater financial stability?
- Do you still need extra rooms to house guests/ children/ parents and extended families who may stay with you for a while (being a sandwich generation)?
- Assess how much to downsize by - consider not only the number of individuals but also the possessions that you consider essential for your happiness.
- In an emergency, how much of support could you receive?
Although affordability, climate, proximity to family and friends, recreation or cultural activities, continued opportunity to work all play a major role in your decision to downsize, the single most important question is if the decision moves you closer to your happiness or further from it. And if you do downsize, keep in mind that the process of downsizing after many years living in a property can be traumatic - nourish yourself emotionally and give yourself time to adjust in your new home.
If you would like to discuss further, please feel free to contact our friendly team for an open and honest discussion to help you along the way.