The pros and cons of downsizing your home
As we get older what we need from the place we call home changes and sometimes that means not needing such a big place.
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As we get older what we need from where we call home changes and sometimes that means not needing such a big place.
Got too much room? Would you like a smaller garden or not so many bathrooms?
If you’re asking yourself questions like these, perhaps it’s time to consider downsizing.
This article helps you weigh up the pros and cons of downsizing your home.
What is downsizing?
Downsizing is moving out of your home into a smaller one that is better suited to your needs and retirement lifestyle as you get older. People downsize for many reasons, so it’s important to consider your lifestyle, wants, needs and finances when looking at your downsizing options.
What is the best age to downsize?
The best age to downsize is different for everyone, and will depend on our own individual situation including financial position, our personal health and our family and support systems.
The most important thing to recognise is when the time is right for you.
What are the benefits of downsizing your home?
1. Boost your retirement savings
Selling your family home and downsizing to a smaller place may help to free up some of your money in retirement years. It means you may have some extra cash to pay off your mortgage, to invest or spend on that holiday you’ve been planning.
2. Less maintenance
If you’re still living in the family home where the kids grew up with four bedrooms, two bathrooms and a double garage, you may have more room than you need. A smaller place may be easier to maintain so you can spend less time working around the house. This could include smaller or no lawns to mow, minimal or no gardening, less rooms that require repainting and touch-up work and less guttering to clean and upkeep.
3. Less cleaning
Downsizing can result in a lot less time spent cleaning. Two bedrooms are a lot quicker to vacuum than four, and one bathroom to scrub is much better than two. Choosing to downsize means you can also look for homes that have easy-to-clean areas and surfaces, such as tiled or laminate flooring and easy-to-clean countertops. Downsizing can also give you a chance to declutter and think about the things you really want in your home, leaving less knick-knacks and décor to dust.
4. Cheaper to run
Heating and cooling a home can be expensive, so having a home with a smaller footprint positively affects your cash flow, which means that you could save more money when the electricity and gas bills come around each quarter.
5. Reduce your carbon footprint
Not only is it cheaper to run a smaller house, when you downsize you also reduce your carbon footprint. By using less water, electricity and gas, and generating less waste and emissions, downsizing also becomes an environmentally-friendly decision.
6. New location to suit your lifestyle
When you retire you've now got more time to do the things you love. Downsizing gives you the chance to move closer a new location that suits your needs, whether that be closer to family, transport, your hobbies and interests, or health services. Perhaps your family has moved away from where you currently live, or you find yourself no longer near the facilities you need, or maybe you'd like a sea change - a move to a smaller home in a new area might be just what you need.
7. Declutter your décor
Downsizing to a smaller home can help reduce your consumption. If there’s no place to put it, you’re much less likely to buy it. That means you may acquire less clothing, furniture and other goods.
8. Reduce your stress
Typically, a smaller home means less responsibility, a smaller workload, and greater flexibility. Homeowners who have successfully downsized may feel happier and less stressed when they’re no longer overwhelmed by the demands and responsibilities of a larger home.
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What are the disadvantages of downsizing?
1. Moving costs
As with any move, you’ll need to cover the costs to relocate your possessions to your new home. While friends and family can help with some items, you might need to hire a moving truck or enlist the services of a professional removalist to shift those bigger appliances and pieces of furniture in your home.
2. Changing furniture
If you are downsizing you’re going to have less space, so you might have to make some tough choices when it comes to your things – the seven-seater lounge might need to be traded in for a two-seater sofa, for example. This can be an additional cost on top of the cost of moving your things to your new place.
On the flip side, it’s a great opportunity to refresh and start your next chapter with new furniture that matches your current style and tastes.
2. Having to let go
We often have an emotional connection when it comes to our homes and possessions, especially if you’ve lived there for a long time, so it can be hard to let go.
3. Making your new space work
You might need to rethink how you go about doing the things you enjoy. If you like to entertain, then dinner parties may need to be smaller and you might not be able to have so many people stay over. But if you’ve bought a new sofa, then there’s always the sofa bed!
4. New retiree on the block
If you are moving to a new area, it can take time to adjust to a new neighbourhood and establish new friendships. But making new friends and connections is part of the experience.
“We got the travel bug many years ago – we love seeing new places, experiencing different cultures. When we moved here we found it was so easy to travel. We lock the door and we don’t have to worry about a thing.”
Christine and Allan Casey
IRT Kangara Waters residents
Other things to think about when downsizing
1. Good design
If you are looking for a new home or smaller property, like granny flats, many retirement living providers like IRT offer villas designed to meet your changing needs as you get older.
We encourage you to look out for bathrooms and kitchens fitted out with modern and safe fixtures such as handrails that can be easily adapted to meet any potential future accessibility issues.
Appliances installed at easy-to-reach height levels and minimal steps and trip hazards are also important for this stage in your life.
Some purpose-built retirement villages also feature safety and security technology such as built-in emergency response systems if you were to have a fall.
Also, if you choose a retirement village to downsize to, common areas are looked after by the operator and they’ll even help with day-to-day home maintenance, like changing light bulbs.
2. Financial considerations
There are many financial considerations to weigh up when downsizing in retirement. Some things to consider may include:
- Tax implications (such as capital gains tax) if you’re selling your home
- Implications of any other existing property you own (such as investment properties)
- Fees associated with engaging the help of local real estate agents, such as advertising and real estate agent fees and commissions
- Interest rates on your home loan and fees associated with opening or closing any bank accounts you may have
- Buying and selling in the same market – your profit margins might not be as high
- Legal fees and stamp duty if you’re buying a new home
- Your current retirement income and how this may change
- Any existing government benefits you may be receiving, such as the age pension, and how these may be affected
- Home and contents insurance premiums.
3. Independent advice
It’s a good idea to seek independent and professional advice as part of your retirement planning so that you can make informed decisions about your future.
- Financial – a financial advisor can review your financial assets, income, discuss any financial risks and answer any questions you may have so that you can feel confident and prepared to move forward with your retirement plans. This includes considerations for both the income test and asset test.
- Legal – it’s also a good idea to engage a legal professional to review sale contracts and oversee property settlement too.
For more information about downsizing, you can also visit the Australian Securities and Investment Commission’s Moneysmart website here.
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Retirement living at IRT
If you’re interested in downsizing your house and upsizing your life, IRT has more than 30 retirement villages across NSW, Qld and ACT. Find out more about the possibilities of village life and how one of our independent living communities can suit you and your unique needs.
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