8 things you need to know before you downsize in 2017

If selling up the family home and downsizing is on your list of goals for 2017, then there’s a lot

If selling up the family home and downsizing is on your list of goals for 2017, then there’s a lot you need to know before you make your decision.

Whether your downsizing plan sees you hitting the road in a caravan, or make a sea change to a retirement village on the coast, there are a number of things you should take into consideration.

Downsizing your home can have an impact financially, particularly for your pension and your estate planning.

With that in mind, here are a few important dos and don’ts to take note of when downsizing.



1. Give yourself plenty of time

In a blog on the Financial Planning Association of Australia website, financial planner Wally David advises that you should start the downsizing process early. He suggest planning a few years in advance, giving yourself plenty of time to work out where you’d like to move to and calculate the numbers. “You want to make the most of your new surrounds and have plenty of time to enjoy your new lifestyle,” he writes. “It’s a stressful thing to go through and it doesn’t get easier as time goes on.”


2. Ask for help or advice

While buying and selling a home can be emotional, it’s important you stay rational and logical. That’s why David suggests asking someone for help. “Whether that is a family member, friend or financial adviser, you need someone who can bring a fresh pair of eyes to the situation and assist with making sense of the fine print,” he writes.


Read more: Is downsizing the key to a happy life?


3. Check any impacts on your pension

You should ask your financial advisor to help calculate how your move will impact on your pension. If you choose not to use a financial advisor, there is a Financial Information Service through Centrelink to help you make a decision.


4. If moving to a retirement village, calculate what you would be left with if you were to move again

If you’re planning on moving to a retirement village, you should be aware that many charge a fee (Deferred Management Fee) for each year you live there. How does the fee work? Well, for each year you live in the retirement village you’re charged a particular fee. The fee is taken out of the proceeds when you choose to sell your home/villa/unit and leave the village. Chances are the amount you leave the retirement village with when you sell – whether that be because of another downsize/medical reasons or death – will be less than what you paid.


5. Take into account any monthly/annual fees the retirement village may charge

Most retirement villages also charge a monthly fee to help cover the cost of running the village. It’s important you take this extra cost into consideration, as it won’t be covered by the money you pay to buy in the village. Chances are it’ll be indexed with CPI as well, so make sure you have enough to cover the fee for the time you plan on living in the village.


Read more: Why downsizing doesn’t need to be a compromise



1. Buying a new home before selling your old home

One of David’s most crucial pieces of advice about downsizing is to not sign a contract on a new home until your old home is sold. “I have witnessed this a few times and it can get ugly, causing unnecessary stress on those involved,” he said. By waiting for your old home to sell first, you’ll avoid unnecessary stresses such as having to sell other assets or getting bridging finance to buy your new home. Plus, you never know how long it could take to sell your home or whether you’ll get what you want for it.  “By selling your home first, you avoid the extra stress, you will know exactly where you stand financially and you can purchase with confidence,” David writes.


2. Dismiss the idea of staying put for a little while longer

If the numbers aren’t working, or you’re not sure it’ll work out – there’s no harm in staying put. By staying put a little longer, you can avoid the stress of moving and potentially impacting on your pension. If your reason for moving was due to a medical condition or your ability to move around, consider bringing in someone to help you out or install some aids to assist with mobility and safety,


3. Sign any contracts until you get some advice

When it comes to retirement villages, contracts can often by complex. That’s why David advises you get a professional to look over them before you sign anything. He writes that during the 2011/12 financial year, Consumer Affairs Victoria received “more than 500 enquiries about retirement villages”. Many of those queries surrounded contract terms and fees.


Are you looking at downsizing in 2017? 

  1. Maureen  

    I’m annoyed that everyone assumes older people want to downsize and move into retirement villages.
    I upsized in my 50s and built a new house on acreage and am very happy living here.It’s very peaceful and within 10 minutes drive of facilities like large shopping centres. I’ll stay for as long as possible. The only reason I’d move is to go to a coastal location. Or if i was incapacitated.

  2. linus  

    I’m annoyed at 61 at how my children keep,telling me get rid of my clutter. I have a big house and it looks lovely, sure I clutter private areas but that’s my stuff!. If I didn’t want it I would do nate it now but I do cherish my memories of things. It’s like they think I’m gonna die or go into a home tomorrow. I figure I have at least 20 years to go, I live a lot healthier than my parents and they lasted fit into their 80 s

  3. Faye Paull  

    We are looking to downsize soon but not to retirement village. Just want a smaller home somewhere near family. Our closest is 3 hour drive away. In the last few years I have realised that I don’t need all that clutter and my sons will not appreciate being left t deal with it all when we are gone. Everyone has different needs and wants.

  4. Debbie Laporte  

    We “right sized” in 2016. and couldn’t be happier. Bought a bungalow with the same square footage as the home we lived in for 30 year in a community with property values much lower than our previous home. We made many trips to the dump and charity shops before the moving van arrived. We love the city we are now living in (away from the GTA) and are making new friend. My children don’t want any of our stuff and I don’t want to clean it anymore.. so it has been a win win for everyone.

  5. Frank  

    I downsized over 30 years ago when I moved out of my big house on stilts on a big block of land in the suburbs – and after 3 ute loads of car and motorbike parts were taken away, there was huge pile of stuff I told my friends ‘take what you like’

    I then moved to a tiny inner city terrace – where any new furniture item required tossing out something old to make space for it – and loved it.

    We have now lived happily in a relatively small inner city unit for over 20 years – and love it every day – and plan to stay here until we drop off the twig.

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