Increasingly, Australian downsizers are cashing in on the housing market, selling large suburban homes or inner-city terraces to make up a sizeable portion of today’s buyers’ market. Now, with the economic downturn and self-funded retirees taking the hit on their superannuation portfolios, the argument for downsizing has never been more compelling. But what are the perks that come with owning a smaller property and do they outweigh the alternative of keeping the large family home?
1. Cashing out and living debt free
Retiring Australians have worked hard their whole lives to buy and maintain a home and build up a nest egg. With the average self-managed super fund balance of $652,465 (March 2019, ATO), it is important that they consider whether they have enough to maintain a home, support their health and have enough cash to live well for the rest of their (and their partner’s) lives. Downsizing allows access to the wealth held in their properties, providing the financial resources to fulfil their retirement aspirations or even to help other family members cover costs like university or a house deposit. By freeing this equity, it significantly reduces the pressure placed on the superannuation fund to support a comfortable retirement. The security of seeing out your twilight years debt free is enough to convince most to hand in the keys to the family castle.
2. Embracing the luxury of time
As people enter retirement, the pull of domestic maintenance in larger homes can be daunting; duties such as mowing the lawn each Saturday, cleaning the pool and climbing the stairs to clean unused bedrooms are all-consuming. A more manageable home offers more time for oneself, especially as some may begin to experience age-related physical limitations. Consider how you could better use your time in retirement with the extra freedom a smaller home would bring – spending more time with loved ones, taking on new hobbies and activities; the possibilities are endless.
3. Lock up and leave
To many, the appeal of being able to travel at short notice or for extended periods of time is attractive. Gated, age-qualified communities provide homes with little maintenance, and shared facilities (pools, clubhouses, tennis courts, etc.) are managed by a strata company with the cost shared with other residents. A set up of this type provides peace of mind for homeowners, allowing them to enjoy all the perks of retirement travel such as carefree trips abroad or even hitching up the caravan to explore Australia.
4. Harnessing the great Aussie community spirit
With the current climate, never has there been a greater need for strong community spirit. Sadly, our suburbs and towns are filled with single resident homes with little support; sequestered from family with often faceless neighbours who are younger and not community minded. Our forced isolation is a warning bell for many, adding emphasis to the importance of belonging to a community and the positive effects it brings to our health and wellbeing. For those in retirement-focused developments, community spirit and a sense of kinship is a part of everyday life. Residents have access to greater social contact and interaction with like-minded people, building lasting friendships through activities, events and shared facilities.
At the end of the day, does size really matter?
A home is where you make it, regardless of its size. By choosing to make your retirement nest egg work for you, you are not only freeing up equity in your home to generate new financial security, but downsizing to a bigger life with a focus on what is truly important. One thing I know for sure is, there’s only one good time to downsize your home, and that is before you have to.