To downsize, or not to downsize!? This is the question facing many home-owning Australians as they prepare to enjoy slowing down for their retirement years.
And the answer is, it depends.
There are many factors to consider when weighing up the decision of whether to sell the family home or not, and it depends on your personal circumstances and goals as to which option is going to be the best for you.
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Retirement Income Needs
For some, remaining in the family home might not be an option, with equity needing to be released from the property to help fund the cost of living.
Retirement Goals
For those with the luxury of choice, it comes down to your retirement goals and what is important to you. You might want to remain in the family home because it is filled with memories, or you might want to relocate to somewhere that offers a different lifestyle or somewhere that is smaller and requires less maintenance.
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While the work and costs of maintaining and running a bigger property might be a motivating factor for downsizing, the cost of downsizing is quite often seen as a barrier.
With selling costs such as agent and legal fees, buying costs including stamp duty and more legal fees, as well as the costs of relocating, the leftover proceeds might not be as much as you had initially thought.
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Another consideration for those homeowners currently eligible for the age pension is the impact of the sale on entitlements.
Your home is not counted for age pension test purposes, however, any sale proceeds from downsizing will be counted, which could negatively impact your pension entitlement and/or eligibility.
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Financial reasons are a common motivator for downsizing. Downsizing may allow retirees to free up home equity, with the proceeds reallocated towards other, income-producing investments.
This means that your retirement nest egg may be better off as a result of downsizing and redistributing some of this allocation towards other growth investments than by retaining these funds in the family home.
There are a lot of opportunities as well as important points to consider when deciding whether or not to downsize the family home.
A licensed financial adviser can help you navigate this decision as part of your overall retirement planning to ensure you get the most out of your retirement nest egg!
At True Journey Financial, we can provide you with professional & personalised financial advice on this topic, so you can be certain in your decision. We have been providing a friendly and family-oriented service since 2014. We assist clients all over Australia by way of virtual meeting.
So, if youβre ready to start making plans for your retirement, call us on 0732620021 or click here to book in a free discovery call with Tamara.