In our work with downsizers we’ve identified five reasons we downsize, and we want to talk about those today.
Once you reach the later years of your life, your kids have left home and it’s time to spend your hard-earned retirement money on travelling. That means you’re going to want a smaller, more manageable property that requires very little ongoing maintenance. Welcome to the world of downsizing.
- Health
As you get older you want to be looking after yourself and putting as little strain as possible on your body. Many people decide to downsize to a home they won’t spend much time on maintaining. Others will move from a multi-level home to a single level for mobility reasons, because stairs may present difficulties if they have hip, lower back or other joint problems.
The decisions to move based on health reasons may be one you’ve planned for a while, or it could come about quickly. Sometimes a doctor recommends the move, or it comes about as a result of a fall you or your spouse took. Either way, there are some important things you need to think about:
- Location: If you’re moving for health reasons, you want the necessary health facilities to be easily accessible. Ensure you’re looking in an area not far away from doctors, a hospital, medical labs like QML, Sullivan Nicolaides Pathology, physiotherapists, chiropractors and so on. If you need regular surveillance or round-the-clock care, you’ll want access to standby nurses or nurses in the complex. This could determine whether you go into an independent retirement village, a retirement village or simply a smaller home or apartment.
- Transition Cost i.e. Budget: Take into account the cost of selling your home and paying for your next place. By knowing what the transition costs are you’ll be better placed to make an informed and appropriate decision.
- Timing: thinking ahead can be very important. If you’re moving to an independent retirement living or to a retirement village, you may need to reserve a spot. Once that spot is available you have to move fast to secure it. It’s a good idea to prepare before-hand just in case the spot comes up quicker than expected.
- Lifestyle
When you retire, life slows down and your lifestyle changes. Often, you’ll make a real estate decision to support these changes. It might be a tree-change or a sea-change, or a low-maintenance home that means less time in the garden. This is probably going to be the last time you move home, so you want to be careful and consider things like:
- Location: You may want to stay in your local area to be close to friends and family still there. Or you might want to move to a completely different location altogether for a change of scenery. This could mean moving close to the ocean, close to a river, into a quiet suburban area, into a built-up metropolitan area like in a CBD, or even into somewhere with acreage. You need to look at the facilities on offer around you. Are there health professionals around? Dentists, doctors, hospitals, shopping centres?
- Budget: Take a look at the costs of selling and paying for your next place. Retiring may mean downsizing in terms of space but upsizing in terms of lifestyle. This means you could pay more for your next place. Others may want to spend less on their next home in order to free up some capital to enjoy their retirement with.
- Timing: As we mentioned in the health section, often you need to move fast to secure your spot in an independent retirement living setup or a retirement village. It pays to be prepared. If you’re looking to buy a house, townhouse, unit or apartment, it may mean you’ll need to sell your own home to afford your next home. You can make a ‘subject to sale’ offer on the new place, but it means you’re going to need move fast in selling your current home.
- Asset Conversion: Assist with wealth creation or debt mitigation
There are usually two scenarios in this situation. In both scenarios it’s a case of paying down debt:
- Your primary place of residence is your most expensive asset. You sell it to pay down debt and buy a smaller home. Home owners in this situation have normally bought the biggest home they can afford. They believe that because of capital gains over time, when they sell, they won’t need to pay tax and can capitalize on this.
- You’re a home owner with multiple properties. You want to sell your primary place of residence and use the proceeds to pay the mortgages on your investment properties and move into a smaller home. This could be one of your investment properties or you could buy a new smaller property outright.
If you’re driven by asset conversion, you probably won’t be in much of a rush to sell. Your line of thinking would be to make the move sooner rather than later. Retirement brings about the need for a change and frees up your time, so you go ahead with the downsizing idea.
- Location
When it comes to location, you might want to downsize and move to where your family is. This could be your children, your extended family or even a return to the friends and comforts of your home town.
Where you’re currently living might be a bit far away for regular visits with your family. By moving closer to them, the commute will be easier and you’ll enjoy the support of regular visits.
There are a few key things to take into account when moving for this reason:
- What facilities are there in the area? Doctors, dentists, supermarkets, cafes, public transport?
- How far is the commute to see your family and friends?
- Would the move likely be subject to sale of your current home?
- Legacy
Sometimes we get retirees looking to downsize and allocate some or all of the proceeds to their children or certain causes like charity. This happens when you want to see the positive effects your years of hard work can have on those around you or care about. It’s a great way of leaving a legacy, a positive mark on the world.
Conclusion
When you downsize, no matter what reasons you do it for, it’ll probably be the last move you make. You want to make sure you do it right. Moving home can be very stressful, so you want to ensure you chose the right house, in the right area, that allows you to enjoy the financial benefits downsizing can bring.
So if you’re looking to downsize, or thinking that at some point in the future you’d need to downsize, they why not give us a call? Even if it’s something you’d only like to do a few years down the track, let’s start the conversation. We’ve got the experience and the knowledge to help you out and answer all your questions. Get in touch with us and let’s set you on the right path.
