The kids have moved out and the house is starting to feel empty — as well as costing a lot to maintain. So is it time to sell up and buy something smaller? We look at the pros and cons of downsizing the family home.
If you’re an empty nester or retiree who owns their own home, chances are you’ve considered whether it makes sense to downsize your home. While there can be financial — and other — benefits in selling up, it’s important to consider whether it’s the right move for you.
Downsizing your home can be a great opportunity to make a lifestyle change for the better. If you’ve always dreamed of making a sea-change or tree-change, this could be your chance. Or perhaps you’d like the convenience of a new apartment in a vibrant part of town, or the sense of community and extra support offered by a retirement village.
Moving into a smaller home can be less expensive to manage, with lower rates and electricity bills. It can also reduce the amount of work you need to do to maintain your home, with less cleaning and gardening required.
As you get older, mobility may become an issue, and a home with easy access and fewer stairs can mean you’re able to live independently in your own home for longer. Selling up may also mean you can move to an area with better facilities for seniors, such as easy transport and access to healthcare.
Financially, downsizing to a less expensive property can free up the equity you’ve built up in your home. You can then use the extra money to go travelling, help out the kids, or simply boost your retirement income.
However, downsizing does have some drawbacks, both on an emotional and financial level.
To start with, moving is often ranked as one of life’s most stressful events. And this can be particularly true if you’ve lived in your home for a long time, and are leaving a lifetime of memories behind. If you’re leaving the area, you may also find it hard to replace the support of neighbours and friends, and you may miss the security of familiar surroundings.
It’s also worth considering whether your new home will have space for your children or grandchildren to stay, if that’s a priority for you.
If you’re selling for financial reasons, it’s important to understand how the money will affect your government entitlements, like the pension and other aged care benefits.
Currently, Centrelink doesn’t include your home in the age pension assets test. But if you downsize, any cash you have left over will be counted as an asset — potentially reducing the pension you receive.
Remember too, that moving is expensive, so be sure to factor in all the costs involved, including stamp duty, before you put the house on the market.
Decide what’s best for you
If you’re thinking of downsizing it’s important to get some practical financial advice that’s based on your personal situation and needs. So before making this life-changing decision, make an appointment with a financial adviser today.