The kids have gone and you find yourself kicking around in a family home that requires more time and effort than you want to spend. Many rooms never get used and the swimming pool has turned a permanent shade of green. It may be time to consider downsizing.
Australian Bureau of Statistics figures show that older ‘empty nesters’ represent one of the smallest percentages of the moving population, however they still number in the thousands each year. Their primary reasons for shifting focus around having a smaller, easier to manage home (23%) and those seeking a ‘sea change’ (19%).
Shifting house in your later years, for whatever reason, can be a major move. There are many factors to consider before you take the leap, including the emotional attachment your home may bring or even the location of where you want to spend your life – but there are certainly monetary benefits to be considered as part of the equation. Here are a few of the main advantages – both financial and otherwise – you should consider when contemplating a shift of home.
Equity. Downsizing to a smaller home can certainly free up a large amount of cash. A small two-bedroom apartment, depending on location, can cost less than half the price of the typical 5-bedroom family home and if you don’t need the space the cash will be well worth it. Lifestyle choices are important at this stage – if you plan to live nearer the sea or want an apartment in an expensive body corporate block the attempt to save money may backfire on you.
Minimalism. Many baby boomers are increasingly concentrating on experiences rather than things and the need to have the latest and greatest toys, clothes and other paraphernalia can often diminish as you get older. Those who free themselves from clutter often vouch for the increased freedom it provides them with and how it lifts their whole quality of life.
Flexibility. Downsizing provides increased flexibility, enabling you to pack up and head off on holiday when required, without worrying about pets or lawns. The growth of the sharing economy such as Airbnb can make apartments an attractive option to rent out while you are away, offering an additional stream of income.
Cash up things you no longer need. Downsizing is not just about freeing equity from the house itself but about the money that can be released from selling off surplus things you no longer use. The lawn mower may not be worth much anymore but it could be surprising how much money can be released from a good garage sale or a few Gumtree listings. Most homes have several thousand dollars of ‘stuff’ that is no longer being used.
Reduced care and maintenance. Downsizing removes much of the headache of home maintenance while helping reduce the costs. Smaller homes use less power and are less expensive to fix. They take less time to clean and if your old place is showing its age you will find moving into a newer, smaller place leaves you with less things likely to break down.
Gets rid of the kids. What better way to make sure that the kids don’t move back in than to make sure you don’t have enough beds for them! Downsizing can provide you with the chance to shake your dependents once and for all. If you’re worried about not seeing the grandchildren you can always go and stay at their place – after all why not give your children a dose of their own medicine!
Downsizing is an emotional time in anyone’s life and can be stressful but once negotiated you will find many benefits beyond those you initially expected to have.
If you’re thinking of downsizing, you may find it beneficial to talk to a financial advisor who can provide you with the knowledge and advice to make the right decisions.
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The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a Financial Advisor or other finance professional.