Downsizing your home, not your life

Downsizing your home doesn’t mean downsizing your life. A smaller home, or a home in a new location, can be just what you need to get your life moving. But how do you know if downsizing will suit you? Let’s find out.

Key learnings covered in this topic

  1. Is downsizing your home right for you?
  2. The benefits of downsizing your home
  3. Financial advice available to you

The reasons for downsizing are endless but for most, their motivations are emotional and/or financial:

  • A tax effective super boost. A downsizer contribution of up to $300,000 ($600,000 for couples) from age 55 can be a tax effective way to boost your super balance. And once you’ve retired, it could give you a tax-free source of income when you drawdown on your savings.
  • Low maintenance living. Maybe you’re rattling around in a home that’s too big, it could need expensive renovations, or perhaps the garden takes too much energy to maintain. Moving into a smaller or newer property could help alleviate some of these pressures. 
  • A new start. It could be time to change your surroundings and create a new you. You might want to be closer to family, move on from old memories, or be woken by the sound of trees or waves for a more relaxing lifestyle.
  • Carefree travel. The responsibility of owning a large home can be an obstacle if the travel bug bites. A smaller place could be less expensive for you to run and offer more freedom to lock up and leave.
  • A retirement with more va va voom. For most people their biggest asset is their home, and many rely on the equity to fund their retirement. A smaller home can provide you with the cash to do the things you’ve always wanted to do.
Things to keep in mind

Downsizing can be a major life change so it’s important to consider all the implications to make sure it’s right for you.

  • The costs add up. There are various costs when you sell and buy a new home. Keep in mind legal and bank fees, agent commissions, stamp duty, capital gains tax, removalist and stylist costs, and any maintenance you have to do.
  • Your network is important. If you’re creating a new life, will you need a new social network? Consider how you’re going to make friends and get involved in the community so your decision to move remains a positive one.  
  • Don’t be overwhelmed by stuff. Your cupboards will probably be full to the brim. Make sure your new home can easily fit your treasures and have enough space for your new lifestyle—room for the grandkids, an area for your caravan, a garage for your vintage car or a spot to hang your hammock.
  • The effect on your finances. If you’re not sure how downsizing will affect you financially it’s best to ask an expert. A qualified financial planner can advise on any government benefits you receive, tax effective strategies to build your super and set you up to live your best life in retirement.

These are just a few things to consider, but other conditions also apply. 

Need some help?

As part of your membership with CareSuper you can speak with a financial planner about how to build a better future through your super.* For more complex matters there’s also a team of experts who can help.^

We really do care about our members, so if you need some help, please give us a call

Information correct as at 19 December 2023.

*Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766. 

^Advice is provided by one of our financial planners who are Authorised Representatives of Industry Funds Services Limited (IFS). IFS is responsible for any advice given to you by its Authorised Representatives. Industry Fund Services Limited ABN 54 007 016 195 AFSL 232514.