For over 55s, one of the burning questions regarding retirement is whether they should downsize or not. The reality is, there are pros and cons to both staying in the family home, and to moving somewhere smaller, and the right choice will come down to your priorities and circumstances.
The decision is certainly a tough one. It will impact both your lifestyle and your finances, as well as your quality of life as you age. So, to help you start to weigh up the options and work out the best way to go, in this article we’re sharing the pros and cons of downsizing in retirement.
Pro: A smaller home means less maintenance
One of the key benefits is lightening the load of household maintenance. A smaller house and yard mean less chores, which is important as you get older and your energy levels decline. It also means you’ll have more time to devote to relaxing or doing the things you enjoy.
Con: A downsized home has less space for hobbies
If you enjoy gardening or have a garage or hobby room to pursue creative projects, less space can seem restrictive. However, it’s possible to downsize to a smaller home that has a garden, spare room or shed, which means you can still enjoy your hobbies, although it will be on a smaller scale.
Pro: Move to a location of your choice
When you downsize, you have the opportunity to move to a new location. Maybe you’ve always dreamed of a sea change? Or a tree change? Perhaps you want to be closer to the city or to your family? The possibilities are endless!
Con: Leave a familiar neighbourhood
The flip side of this is that you’ll need to leave your current home and neighbourhood. How easy or difficult this is will depend on how the area currently meets your needs and the friendships you have with those in the community.
Pro: A smaller house can reduce your bills
Living in a smaller space means you’ll use less power on heating, cooling and lighting in your home. Depending on your situation, this could leave you with extra money available to save or treat yourself.
Con: You’ll need to downsize your belongings
When you downsize, you’ll have less space for your stuff – which means you’ll need to make some tough choices about what you’ll keep. Saying goodbye to your things can be hard, but it will allow you to get organised which will make your move easier.
Pro: Decluttering is good for you
If you can get past the sentimental attachment, decluttering is actually good for you. It can re-energise you and reduce anxiety and overwhelm from having to much stuff. It can also be a good way to earn some extra cash by selling your excess belongings. Plus, you can help others by giving away your unwanted items to those who need them.
Con: Your larger furniture may need to be replaced
When you move from a spacious home to a more compact space, there’s a chance that some of your furniture may not fit comfortably. Replacing couches, beds and other furniture can be costly so be sure to consider this when looking at potential homes.
Pro: Free up some capital to do what you love
Depending on your circumstances, downsizing can leave you with some extra funds after you sell your large home. This can be used to travel or pursue other activities that may have previously been out of reach, or to top up your super.
Con: Downsizing can affect your pension
Before you make a decision to downsize, it’s important to understand the implications on how it may affect your pension. Your home is not included in the asset test, but if you sell, the extra money in your pocket will be. Talk to a financial professional to make sure you end up better off.
Pro: Enjoy benefits of over 55s living
If you choose to downsize to a retirement community, you get to enjoy the added benefits that village life brings. The on-site facilities are convenient and being surrounded by neighbours at a similar stage of life can lead to new friendships. You can also enjoy an added sense of security as the managers live on site and the community is often gated.
Con: Can be hard to adjust to a new home
Change can be difficult, especially when you leave your comfort zone for something completely different. If you are finding it hard to adjust, talking to friends and family can help. If you give it a chance but still feel it’s not for you, remember, you can always sell your smaller home and move to somewhere that is a better fit.
It’s a Personal Choice, So Weigh it Up and Trust Your Instincts
While for many the decision to downsize is purely a practical one, it’s important to carefully consider the pros and cons against your own personal situation. Be honest about what is important to you and look closely at the pros and cons to work out if downsizing will make your life better. Seek advice from loved ones as well as professionals. But most importantly, listen to and trust your own instinct and do what’s right for you.