Top tips for your downsizing journey (part 1)
Date Posted: June 1, 2021
The road to downsizing can seem overwhelming and stressful at times. To help you along the journey, here are 5 must-dos to evaluate if downsizing is the right move for you.
- Assess your readiness
As we like to say, the ‘right’ time is the time you decide to make it right! Downsizing may not be for everyone, but it’s an option that many can benefit from – especially those who love to travel! It might be the right time for you to downsize if:
- You’re ready to retire. Retirement is an ideal time to assess whether your current home is best suited for your future, or whether downsizing presents a better solution for your longer-term lifestyle plans.
- You travel often. Downsizing provides an opportunity to consider cost-effective, low maintenance and lock-and-leave approaches to your home, so you have more money and peace of mind while off exploring the world.
- You’re experiencing unsustainable living costs. Downsizing provides a real opportunity to reduce and even eliminate certain costs of living. Lower living costs mean more opportunities to tick items off your bucket list!
- You’re asset rich and cash poor. If you have value in your home and are looking for greater access to cash, it may be time to consider downsizing to free up equity. This will mean you have more money to spend on the things you love to do.
For more, read our blog When is a good time to downsize?
- Evaluate your options
There are many downsizing options available to people thinking about moving on from their current home. Before deciding on what is best for you, it’s wise to spend some time understanding the pros and cons of each option.
- Buying into a Downsizing Community. A “Downsizing Community” also known as a Lifestyle Village or Land Lease Community is a place where independent people aged 50+ can live in a secure and vibrant residential environment. In addition to providing housing, Lifestyle Villages typically offer homeowners private access to a range of resort-style amenities that support an active and connected way of life.
- Buying a smaller home. If the kids have moved or your relationship status has changed, you may be now living in a home with a lot of surplus space. Moving to a more compact home with fewer bedrooms and a smaller garden might be the right option for you.
- Buying a unit or apartment. Another downsizing option is to consider a move to a unit or into an apartment building. You could buy off the plan or purchase an existing unit or apartment within your current neighbourhood.
- Ask lots of questions
Before making the move, it’s important that you have a thorough understanding of how land lease communities work, and what each community offers. Most Downsizing Communities work on the land lease model where you buy your own home and lease the land on which it sits via a weekly fee.
Because each land lease community can operate differently, and offer different inclusions, here’s a list of questions you may like to keep handy when you’re exploring your options:
- Is there a weekly site fee & what does it cover?
- How does buying a home in the community work?
- Can you access government concessions like rental assistance?
- Are there any costs payable when living in the community?
- What facilities accompany home ownership?
- Are there any exit fees payable if you decide to move out of the community?
- Are pets allowed?
- What measures are in place to protect your security of tenure?
- What legislative protection is available?
- What homes are available and what is included in these homes?
- Are there any rules in the community?
If you’re considering moving to a smaller home or apartment, discover some key questions here.
- Write a list of pros and cons
You need to determine if and how you’ll benefit from making the move to a downsizing community. How will your lifestyle, wellness and financial situation improve? If you’re looking to enjoy more travel in your retirement, here’s how you’ll benefit from downsizing:
- More cash, more adventures. Downsizing to a more affordable home can help you free up a significant amount of cash to fund your adventures.
- More time, more travel. Downsizing to a smaller, low-maintenance home means less time fixing and cleaning up, and more time doing the things you love – like travelling! You’ll not only experience lower living costs, but you’ll eliminate the time and stress that comes with tending to a larger home and garden.
- Better security, longer holidays. Downsizing to a secure community means you can lock-up and leave for a worry-free holiday.
- Resort-style amenities, resort-style living. When you make the move to a downsizing community, you’ll enjoy holiday vibes and resort-style amenities 365 days of the year.
- Reduced living costs, greater travelling fund. Downsizing to a land lease community eliminates council rates and lowers insurance and range of other living costs. This means you can reduce your everyday spending and start adding to your travel fund!
- Revisit your finances
According to a Financial Review story in mid-2019, more than 50% of Australians over 66 were classed “self-funded retirees”. If you are in this category, with income and assets too high to access the age pension, you may be experiencing sleepless nights when it comes to your finances and future planning.
Recent data from financial institution MLC also shows that one-third of 60 to 65-year-olds are retiring with a mortgage, and an increasing number of these retirees are downsizing to free up equity in their homes and pay off some of this debt.
Before deciding whether downsizing to a land lease community is feasible for you, it’s a good idea to assess your financial situation, and engage a financial planning expert if required. You may also like to learn more about the Downsizer Contribution Scheme, and how this can help you achieve your goals for retirement.
To discover how your bank account (and travel fund) may benefit from downsizing your home, read our blog: 4 financial benefits of downsizing.