The thought of downsizing for retirement can be a daunting experience.
But rather than seeing it as an end of an era, successful downsizers find it a liberating experience as part of taking stock of where and how you’d like to spend your post-work life.
In this feature, we look at some of the tips and strategies to turn downsizing into an opportunity to upsize your lifestyle and get back that most precious of commodities – time.
Once you have decided that downsizing is the right move for you, the next step is to decide where you should ‘rightsize’ to.
That decision has far-reaching emotional as well as financial considerations, so it is important to do your research and really give some thought to the subject before you sign on the dotted line.
In this feature we look at 7 tips on how to downsize for retirement.
7 Tips When You Start to Downsize
Is it the right time to downsize?
Only you can know for sure, but there are tell-tale signs that could indicate that making a move to a seachange or tree change retirement location is right for you.
Next, it’s time to look at pros and cons of making a downsizing move before making a financial decision.
So, what happens next when you decide that downsizing is right for you?
Allow Yourself Time
Ideally, downsizing shouldn’t be done in haste – or when circumstances have forced it upon you.
It should be a choice you’re comfortable with once you’ve spent time examining all your options, such as understanding the difference between a retirement village and an over-50s lifestyle resort.
Once you’ve done this, take the time to speak to a trusted financial advisor to fully understand any tax or pension implications of selling your family home as well as to create a financial plan to ensure you have enough income for your retirement.
Be Realistic
Before putting your home on the market, take a well-considered look around you. Not everything is going to move with you when you downsize.
That’s a good thing!
And yet, many people report that physically decluttering can be among the most stressful parts of a downsizing lifestyle.
Experts advise that you should start by easing yourself into the process by getting rid of old paperwork and accumulated junk that you’ve been ‘getting around to’ for years.
The next step is to consider those keepsakes and family heirlooms that you’ve been meaning to pass on to other family members.
Some of those prized possessions will be truly valued and it can be a great joy to see the next generation take so much pleasure from items that you also treasured. However, it can be distressing when no one in the family shares the same passion for your collections or heirlooms.
You’re not alone. It is a challenge that a great number of Baby Boomers face.
In the case of collectables that don’t have a particular family history or sentimental story, places like Facebook Market place are an excellent (and free) way of helping them find a new home with someone who will love them as much as you have.
For other items, consider donating them to a local charity knowing that they will be going to a good cause to help people in need.
Take Note of What You Can Bring with You
Rightsizing to a whole new life in a GemLife resort is an exciting time. Our homes are spacious and expertly designed for how today’s over-50s prefer to live.
When it comes to preparing for the downsize move, we recommend looking at your floor plans and measure furniture to help you decide which pieces will be coming with you.
Some of our homeowners have even built a scale model of their GemLife home, along with model furniture to ensure their favourite pieces fit!
Start Downsizing Unused Areas First
Once you’ve identified the furniture making the move with you, then the real work of downsizing begins.
Professional organisers will tell you to start by acknowledging that this is not a painless process. Take the time you need to identify what has practical utility and what things can be passed along to friends, family or to charity.
- Take the emotion out of it. Begin with a room which doesn’t have a lot of emotional attachment such as the laundry, garage and kitchen before tackling bedrooms and living rooms.
- If it’s broken, it’s got to go. Broken utensils, chipped crockery and incomplete ‘get around to it’ projects should be the first into the ‘dispose of’ pile.
- Seeing double? Duplicates of common household items should be given new homes. Linen cupboards are a prime location for multiples of sheets, towels, and tablecloths to gather. Most of these can be donated to charities to give them a new lease on life.
- Save the best until last. The very best of what you have in those rooms are the obvious pick to make the move with you. But some people use the opportunity of rightsizing to a resort like GemLife to treat themselves to brand new kitchenware, crockery and cutlery to go with their new designer kitchen.
If you’re unsure whether something should be kept or not, run each object through this set of criteria:
- Is it in good condition?
- Is it something you’ve used in the past twelve months?
- Is it something you would need to buy again if you didn’t have it?
- Does it work with your current lifestyle as well as the lifestyle you have planned?
- Does it fit in your new home?
If the answer is no, the item should go.
Why is decluttering important?
There are three reasons why decluttering is an important part of the process when downsizing:
- It’s about putting you first. Decluttering gives you the opportunity to prioritise yourself and your future without the burden of managing a hoard of things that you’ve been hanging onto out of habit. Decluttering is finding the highlights of your life and giving them pride of place in your new home.
- It makes packing easier. Moving is much easier when you have fewer things to take. As you pack, have in your minds’ eye exactly where things will go in your new home. If you can’t identify that place, then consider whether you really need it.
- It makes selling easier. Potential home buyers want to visualise their furniture and possessions in the space. This is much easier if the walls are largely cleared of photographs and rooms have only essential furniture.
Be Aware of the Sales Process
While it can be exciting to see how much your family-sized home fetches in a buoyant property market, you do need to be aware of the costs and financial implications of selling.
We take an overview of some the things to bear in mind, however it is important to look for prudent legal and financial advice so you can be fully aware of any matters that may impact on your finances.
Before selling your home
Fees vary, so do your homework before selecting a real estate agent. Rates may be calculated in one of three ways:
- Flat fee – This is a fixed fee charged by the estate agent that is paid regardless of what the home sells for.
- Percentage of sale – The amount varies depending on the agent and market forces, is typically between 1 to 3 percent of the sale price.
- Bonus rate – Real estate agents may negotiate a bonus rate on properties where they believe they can get a premium sales result. So, in addition to the percentage of sale, the agent may also receive a bonus percentage over and above a nominated sale price.
You will also be up for marketing costs which includes things like:
- Online advertising
- Flyers
- Photography
- Sign boards
- Floorplan design
- Copywriting
These costs are typically between $5000 and $10,000.
The real estate agent may recommend basic maintenance such as tidying up the gardens and a full interior spruce-up to present the home in its best light. This is where decluttering becomes important. Much of the staging of your home can be done with your current furniture but you may choose to have a specialist company do it for you using display furniture, but it does come at a cost.
On selling your home
Once you have sold your home and paid the real estate agent’s commission, there are the legal fees to consider.
- Conveyancing fees – these are charged by solicitors or specialist conveyancers to manage the legal transfer of your home and can cost a couple of thousand dollars.
- Lender’s costs – if you still have a mortgage remaining on your home, your lender may have a discharge fee to settle the mortgage. This fee varies from bank to bank.
Pension, deeming, and superannuation considerations
If you are on the Australian aged pension or on a Department of Veterans’ Affairs pension, you will need to factor in how the proceeds of the sale of your home impact on your eligibility to receive the pension.
Currently the rule allows you up to 24 months to build or purchase a new home before pensions are affected.
Furthermore, as of 1 January 2023, the Federal Government has reduced the deeming rate from 2.25% to 0.25% on the proceeds of a home sale after that two-year period has expired.
Did you know that downsizers can contribute up to $600,000 per couple from their home sale into superannuation? This contribution is not subject to the 15 percent tax on superannuation contributions and is also available to people over the age of 75 who are otherwise locked out of making superannuation contributions.
Learn more about downsizing for pensioners here.
On purchasing a new home
So, what are the costs associated with new rightsized home? There is the purchase price, of course, but there are also conveyancing fees to factor in as well.
If you are purchasing a home in a retirement village, you will also be expected to pay stamp duty on the home and this amounts into the tens of thousands of dollars.
However, when you buy a home in a land lease over-50s lifestyle resort, you don’t pay stamp duty because you are leasing the land your home sits on.
And, if you are eligible for an Australian aged pension or a Department of Veterans’ Affairs card, you can also receive rental assistance to help offset the cost of the weekly site fees.
Choosing a home in a retirement village also comes with expenses that you might not have budgeted for including entry fees, exit fees, deferred management fees, capital gains fees, refurbishment fees and more.
Take Time to Settle In
Moving into a new rightsized home is a big change and there’s a lot to get used to.
Having done your homework on location and selected the right retirement community for you, it is important to really get to know the area you’re moving to.
Make sure you’re familiar with the location of shops and essential services like doctors, dentists and vets. Increase your anticipation of the move by exploring the local area – the parks, entertainment venues, and landmarks.
Just as important is getting to know your new resort community. There will be plenty of people whose experiences are just like yours. Quality over-50s lifestyle resorts provide lots of opportunities for homeowners to get together whether it is at the gym, the pool, the bowling green or perhaps at one of the resident-organised functions in the grand ballroom or the arts studio and workshop.
Be Prepared for an Emotional Experience
There’s no getting around it. Downsizing will be an emotional experience, so expect a pang of longing, a touch of sadness and perhaps a few tears along the way.
Accept those emotions for what they are and acknowledge where they come from.
When your rightsizing move is done on your terms and on your timetable, those turbulent emotions should include a measure of excitement and anticipation as well.
Looking to Downsize? Here’s What GemLife Can Offer
GemLife offers a whole new life for active over 50s. Our resorts are located in the most desirable tree change and seachange locations in Australia and feature five-star facilities and luxurious homes that have been designed for modern living.
Let’s take a closer look:
Security & Peace of Mind
GemLife is a welcoming gated community offering ‘lock-up-and-leave’ convenience for those ready to begin life’s next big adventure.
Our homes feature security screens on doors and windows as well as an individual alarm system. Entry to the resort is via a number plate recognition system for added security and convenience.
GemLife also includes caravan and boat storage as well as the exclusive Explore by GemLife program where homeowners can exclusively hire luxury Jayco motorhomes for their holidays.
An Active, Social Lifestyle
Our resorts feature premium recreational and leisure facilities for ultimate wellbeing. Our homeowners enjoy exceptional social, leisure and sporting facilities on their doorstep with plenty of opportunities to meet and make new friends.
Try new sports like bocce and pickleball, rediscover a lost passion for golf in the state-of-the-art simulator or bowl the perfect game in the ten-pin bowling lanes.
Our resorts also come with a creative arts studio, residents’ workshop as well as a games and music room, theatre stage, commercial kitchen as well as residents’ bar and coffee lounge offering ample opportunity for entertainment, laughter and enjoyment.
Desirable Australian Locations
GemLife resorts are found in some of the most desirable locations in Australia, offering easy access to important amenities as well as being convenient to major urban centres.
With resorts in Queensland, New South Wales and Victoria, you’re bound to find the whole new life you’re looking for.
Financial Freedom
As a land lease community, GemLife offers financial transparency. You own your home and simply pay a modest weekly site fee that covers the rent and maintenance of the resort facilities, which is comparable to body corporate fees.
And, as we mentioned earlier in this article, if you have an Australian Seniors or Department of Veterans’ Affairs card you may be eligible for rental assistance to further reduce the weekly fee.
GemLife homes also have access to heavily discounted electricity through our Virtual Power Plant program. Some of our homeowners report receiving $0 power bills!
Explore the GemLife Difference
Deciding it’s the right time to downsize is a big life decision. Luckily, the team at GemLife makes downsizing easy when it’s time to start the next chapter.
GemLife carefully selects each resort location to ensure our residents experience the best of over 50s living to help kick start their next chapter.
With state-of-the art amenities, facilities and homes, GemLife provides the perfect lifestyle for those looking to ‘rightsize’.
For more information, reach out to our specialist team or request an info pack.
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