After retirement, it’s common to think about selling the family home and moving somewhere a little smaller. Downsizing, as it’s called, puts all those empty rooms to use with a new family while also letting you enjoy your golden years in a home better suited to a retired lifestyle.
Downsizing doesn’t have to be only about retirement, however – there are a number of benefits and drawbacks that you should consider before you downsize. Get in touch with us today to learn more.
The benefits of downsizing
Moving into a smaller home has a wealth of benefits at any stage of life.
1. You can better enjoy retirement
Large family homes, while full of cherished memories aren’t always the best environment for older people. Too large a house can quickly feel immensely lonely once all the kids have moved out, and stairs in multi-storey homes can be a major hazard.
Moreover, upcoming legislation changes mean that retirees who sell their long-term home can contribute up to $300,000 to their super – funding their retirement and creating liquid assets for easier estate planning.
2. Debt management can be easier
For those of us not yet at preservation age, downsizing still has benefits. Like many forms of debt, a mortgage can cause huge amounts of stress. Just shy of one million Australian households are estimated to be experiencing mortgage stress, reports Digital Finance Analytics. Meanwhile, 21,000 are in severe distress.
In downsizing, you can sell off your home to settle existing mortgage debt and either begin renting a home or instead purchase a smaller, more affordable house.
3. Time will be on your side
A large home can require a lot of maintenance. If you’re juggling a full-time job and kids or simply don’t have the energy or resources to be tending a garden, dusting and vacuuming several rooms regularly, downsizing might be a good idea. With a smaller home, you’ll have fewer chores and more time to do the things you love.
The disadvantages of downsizing
Despite the many benefits, downsizing may not be for everyone.
1. You’ll lose something sentimental
If you’ve lived in your home for quite some time, it can be very hard to let go of a space that features in the vast majority of your treasured memories. You need to be emotionally prepared to say goodbye.
2. Change can be jarring
Change rarely comes easily. If you’re looking to downsize, consider where you are in life. If your kids are still at home, will you have the space to accommodate them and, at times, their friends? If you are – or are soon to be – retired, are you willing and able to adjust to a new home or do you rely on the familiarity of yours?
Winding down into a smaller lifestyle involves some pretty big changes. Don’t feel like you have to face those alone – for personal assistance in downsizing your life, contact one of our advisers today.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.