Downsizing to a smaller home in retirement can be a great way to free up cash for travel and other life pursuits, but how do you know if it’s the right choice for you?
For many Australians, knowing they can downsize their family home into something smaller and less expensive, affords them financial security. Especially if their superannuation balance isn’t what they’d hoped come retirement age. If you’ve considered downsizing in retirement this article aims is for you.
4 Reasons Why Downsizing in Retirement is Important
Realise the equity in your home
Retirement is a time to explore new hobbies, travel and spend time with family. It’s also a time when you’re more likely to experience health issues. Either scenario, increased leisure or illness, requires extra cash. Being house-rich, i.e. having equity in your home, and cash-poor when you are retired can place a lot of extra pressure on your new life stage. By selling your home and moving to a smaller abode, you are able to realise the equity and put it to good use.
Eliminate the mortgage
If you are heading into retirement with a mortgage, downsizing your home could help you eliminate the mortgage payment. Depending on how much equity you have, selling your home might net you enough to pay cash for a smaller place and wave goodbye to an ongoing mortgage payment forever.
Reduce maintenance bills and labour
Smaller homes require less maintenance which is important as you get older. If you enjoy gardening but despise clearing the gutters, you can downsize to a home with a garden and still have the cash available to outsource the maintenance work.
Ensure bills stay low
Whether you’re living on superannuation benefits, the age pension or investment income, keeping costs low in retirement is paramount. Even if you don’t have a mortgage, the costs of keeping a home in retirement can be overwhelming. By downsizing in retirement you are ensuring your costs stay low with lower council rates, water rates and insurance premium.
Don’t underestimate the importance of downsizing in retirement. It’s a smart move for a lot of people. If you want to reduce your monthly mortgage payment and ongoing utility bills you should give downsizing some serious thought. By selling your larger family home you could become mortgage-free and have enough cash for travel, to help family or to keep aside for future medical expenses. At a time when you are stepping away from regular employment income that extra cash cushion can provide immense financial stability. Whilst we can’t deny it is an emotional decision, we’re quite sure that any anxiety surrounding the move will dissipate when you’re exploring Europe by river cruise or on safari in Africa. Downsizing your family home allows you to grab life by the horns and enjoy it!