Downsize Now - News and General Advice for People

downsizing your stuffBefore you decide whether or not you are ready to downsize, you should consider the risks. What are the risks in downsizing? We have compiled a list of the key things you need to think about before you determine it’s the right move for you or not.

Key downsizing risk #1: Less Space

If you like to entertain friends, you will have less space to do this. Elaborate parties aren’t that easy to do in a small apartment. If you often host holidays, you will need to think about what that might look like in a smaller home. Additionally, there is less storage space so, all of the dinnerware you’ve invested in for special occasions might not be able to come with you.

If you often have visitors stay with you, you might not have the space to accommodate them. If your children and grandchildren don’t live nearby, you may want to have plenty of space for them when they come to visit. Especially if they come often. If that loss is too significant for you, downsizing might not be right for you.

While you may see a smaller space as cozy, in reality, you may end up feeling cramped especially if your previous home was large. There are ways, of course, that you can make rooms feel larger, but it’s definitely a risk that you feel hemmed in and catch cabin fever.

Key Downsizing Risk #2: Your Lifestyle

Your lifestyle will change completely because everything you do will be different. You will shop differently, you will purge possessions and therefore how you accumulate them will change, you won’t spend your free time the same way or gather in the same way, and you may not be able to entertain as you did before.

There is an emotional aspect that you need to work through. You may have decided that you were prepared to let go and move only to realise that this isn’t the case. You’re leaving the home you have spent years in, you raised your children there, and may have seen grandchildren playing in the garden. It’s a risk to let all of that go.

You will be moving to a new neighbourhood and a new home. There is a risk that you just don’t fit in or like it once you’re in place. This is why many people choose to rent before they buy – this is a costlier exercise and it means more moving, but it allows you to determine whether the area is right for you.

Key Downsizing risk #3: The Financial Side

There are social security implications.

For many, their home is a status symbol which means that letting go of that to move into a smaller home is seen as a loss of prestige. If you feel that your home represents your success, downsizing might be the wrong move for you as you risk changing people’s perception of you.

What are The Risks in Downsizing? Only you can truly determine what the risks are for your downsizing project.

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If you are considering downsizing, it’s important to do the research and determine what you are entitled to, in terms of government resources. The government does offer incentives for seniors who are looking to downsize. You can take these tax benefits and advantages into consideration during your planning stage. Of course, you need to first determine whether you are eligible to receive these benefits.

For many, the decision to downsize or not isn’t tied to finances. However, that doesn’t mean you shouldn’t maximise the resources that are available to you in terms of government resources and incentives. They are there to be used so, it’s important that you take the time to educate yourself on what options are available to you before you make any moves to start the downsizing process.

New Incentives for downsizing

So, what government resources are available for downsizing? The newest incentives took effect in July of 2018. For people over the age of 65, there is an after-tax contribution available of up to $300,000 paid into your superannuation fund. This is from the proceeds of selling your primary residence (of 10 years or longer). If you have a partner, you are both allowed to use this incentive, which will double your non-concessional contribution.

This incentive is incredibly valuable for people over the age of 75. Before this legislation, they were not able to make super contributions when selling their primary home, but now they can. Additionally, if you have worked 30 consecutive days (at least 40 hours) in the current financial year, you can make voluntary contributions (aged 65 to 74).

The entire idea behind this legislation is to encourage and allow people to move into homes that are more appropriate for their current needs. This will, in turn, free up larger homes for families who need them. Almost 20% of Australians over 50 who have failed to downsize believe this incentive is enough to allow them to do so.

Some additional Incentives

What government resources are available for downsizing? In addition to the legislation we discussed above, there are other options. It varies by state and it all depends on which one you live in. Western Australia was the first state to offer incentives for downsizing, and as a result, other states were inspired to also follow suit. In fact, WA beat the government by a year with their incentive offering. The stamp duty concession facilitates savings of up to $15,000 for seniors. In addition to offerings in your own state, you may find that you have more options if you are planning to downsize by moving from one state to another.

The only move that would make it unlikely that you can take advantage of incentives is if you plan to  sell up and move abroad to settle down. However, the best way to find out what is available to you, and what you are eligible for, would be to seek out advice from a financial adviser. It’s always in your best interests to seek advice from professionals before you take any official steps into the process.

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Once your kids leave home, you are suddenly in a house that is too large for your needs. So, downsizing seems to be a smart consideration to make.

There is a certain pressure involved as well, with the incentives the government are offering looking to make way for the younger crowd who are looking to move into family homes.

There is a lot to consider here – you have made a home in your community and you might not want to leave the social circle that you have created. You have a connection to both the home and the neighbourhood so, it’s nice to maintain that connection by finding a smaller home within your current neighbourhood. However, there are a wide variety of options that you need to consider when you decide to downsize.

What are the Options When Considering Downsizing?

It gets difficult to maintain your home as you get older, particularly when it has multiple levels. However, if you are hesitant to sell, there are plenty of alternatives to help you avoid doing so.

Consider Leasing

You can rent out a room, rooms or even an entire level of your home. It’s possible to do this on a long-term basis or for short-term lets. It means you get to stay in your home, and it eases your burden. Of course, it means that you will likely need to share a kitchen. So, you may want to share with another retiree or a friend who has downsized.

Another Way To Live

You aren’t ready to sell, but you do want to go exploring? Then rent your home out while you take to the open road. You can worry about downsizing later. This is a good opportunity to get to know where you may want to settle down as well.

The other options when considering downsizing

Whether you move into a California bungalow, a Queenslander or an apartment, you need to be prepared to compromise. You probably won’t find a home that ticks every box on your list. You may have to settle for living a little bit further away than you anticipated or, you may have to live with a single bathroom rather than two. Compromise is inevitable, but before you start shopping for a new property you are going to need to consider what you aren’t willing to compromise on. So, set out your absolute must-haves in stone before you get started and think about the points you are willing to compromise on. It will make the process much easier.

For example, if you want freedom and adventure, an apartment in the city is a good idea, but a retirement village outside of town probably isn’t.

If you are suffering from ill health, there’s a good chance you want your support network close by. You may want to consider investing in a home with a Granny flat and inviting one of your children and their family to move into the main residence. It gives them part of their inheritance now and provides you with comfort. You can move into a retirement village that offers health support or, simply hire a health aide/assistant when the time comes.

You might also like to read our article on What are the best housing options for Seniors?

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As you age, you realise that you need to determine where you plan to enjoy your silver years. For many people, downsizing is the natural progression.

It’s not just for people about to retire, though. It’s something that many people start thinking about as they reach 50 or see their children leave the nest. For some, it’s about finances and for others, it’s all about saving space and reducing the amount of work they need to do around the home and yard.

That’s what downsizing is – it’s selling the large home you have been living in and trading it for a smaller place. There are a variety of options available so, you can think long-term and aim for a retirement village or simply look for a flat in the city. There are a number of things that you should consider before you start the process.

Planning Ahead

What is downsizing? It’s not just moving into a home that will cost less than you are currently paying. For many downsizers, that’s merely an aside.

The main focus is to create a plan and know what you want and why you want it. So, to plan you need to first determine your goal. What is your goal? Do you have retirement in your sights? Is it a career shift or a lifestyle change that is driving you? Or, is it just a desire to get everything in line to enjoy life to the max? Set a budget for your new home, that’s the place to get started.

You should also consider where you want to live, and what type of home it is you want. It could be a smaller house, a retirement village, an apartment or even a Granny flat. It really depends on how much maintenance you want to look after – if you enjoy gardening, a smaller home might be the right move for you. If you don’t, an apartment will make life much easier.

The key truth of downsizing

What is downsizing? Well, you will need to start letting go of many of your material items. The biggest downside to it is that you have to downsize the items you own to fit into your new smaller home. It’s time to sift through your old clothes and think about what you really want to take with you.

Additionally, you should avoid purchasing a new home until your current home sale is complete. Don’t buy any new furniture or décor until you know exactly what your new space will look like. If you ultimately choose to move into an apartment you should think about how seniors friendly it is. You will also want to think about how close you are to shops, public transport, and health services.

The government does offer incentives to people who are looking to downsize, particularly for people over 65. Additionally, some states offer their own schemes to incentivise downsizing. You can seek out the assistance of financial advisers and legal experts.

What is downsizing? It’s a new chapter! So, while it might be an emotional roller coaster, it is the start of something exciting. Why not read our seven key considerations for downsizing or the Biggest regrets that Retirees (and how to avoid them) to save you some time and money.

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You might not need to save money, but downsizing isn’t just about finances, it can also save you stress. The less space you have, the fewer things you will have and the less upkeep will be required of you. It isn’t an easy process, though, so it’s important that you know when you should downsize. There is an emotional burden to the process, as well as a financial one.

There is a lot to consider – you may have spent 40 years in your home, raised your children there, and the idea of letting go is difficult. There is a lifetime of memories tied to this old house and as much as you want to have a property you can maintain, you still can’t let go of the one you’re in right now. The process will be easier if you are sure it’s the right time for you.

Five questions to ask yourself about downsizing

If you want the answer to when should I downsize, then you can ask yourself the following questions.

What do your mortgage payments look like?

The closer you get to retirement, the more likely you are to want to reduce debt. So, the remainder on your mortgage might be the biggest sway over whether you choose to downsize now or later. If you are nowhere near to paying it all off and approaching retirement, now is the time to downsize. Of course, if your home is already paid off, you can downsize whenever you like.

Are you in a financial position to move?

Moving isn’t cheap, even if you plan to downsize somewhere locally. It’s also time-consuming so think about the logistics of packing, moving, and unpacking.

Are you ready to let go of your belongings?

This is a key part of downsizing, you have to let go of your belongings. Not everything will fit into a smaller space so, you have to decide what you are comfortable with getting rid of, whether you donate it, sell it or pass it on to your family. It can be really difficult to let go and if you’re not ready to do it, you might not be ready to downsize.

Are you currently living near family?

This is another key consideration you will need to make before you determine whether you are ready to downsize. If you currently live close to family, you don’t want to let go of that support. As you get older, your health declines and you want your loved ones near you. If you are moving closer to family, then it’s an easy one. If you are thinking about going abroad, you will need to really consider what that looks like for your health and happiness.

Would someone inherit your home?

If you have family and you’re holding onto your home because you want to pass it onto them, you should speak to them directly. You might find that your children don’t want your home. Many children simply sell a home when they inherit it because they are already established in their own places. Don’t hold onto your home simply because you want to pass it on to someone else.

Ultimately, it’s up to you to consider your situation and determine whether now is the time to downsize or not.

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Downsize Now is a leading online journal helping people make the right downsizing decisions. we provide highly relevant content to those making downsizing decisions. We also connect companies that help people through their downsizing journey

Downsize Now is a leading online journal helping people make the right downsizing decisions. we provide highly relevant content to those making downsizing decisions. We also connect companies that help people through their downsizing journey

Downsize Now provides leading independent information, news and general advice for people considering downsizing. Our focus is the provision of high-quality information, news and project advice to assist people in transitioning to the next phase of their life. We are part of the Life Begins At suite of quality publications.

We are Downsize Now a leading independent publisher of tips and news in the world of downsizing. Our leading online site helps people navigate the downsizing decision with informed relevant content and leading project information

Downsize Now provide the latest information and updates to those considering a downsize in life. Our website contains valuable resources to assist people make informed decisions around their futurel life.

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