Retirement is often a catalyst for selling the family home and moving somewhere smaller. Changing needs, lifestyle and financial considerations all come into this decision. When deciding where to retire the cost of real estate is often a major factor and may provide an opportunity to put some extra cash in the retirement fund.
Reasons for downsizing
· Your property may be worth a lot of money and downsizing can free up cash for other retirement expenses
· A smaller space can reduce your costs including maintenance, insurance, and utilities
· An empty nest means your needs have changed – six bedrooms may no longer be necessary
· You want to take advantage of downsizing contributions to superannuation
Take advantage of the downsize legislation
Depending on your financial situation and goals, some of the money from the sale of your home may be added to your superannuation. If you have owned the property for 10 years or more and are 65 years or older, you may be able to contribute up to $300,000 from the sale of the family home into your super. This contribution is exempt from the usual work test requirements and doesn’t affect your contribution caps. For couples both can make the most of the downsizer opportunity which means you can potentially contribute an extra $600,000 into your super. There are some strict rules about the timing of these contributions so be sure to check the legislation and speak to your financial adviser.
Don’t ignore the cost of moving
Buying, selling, and moving house comes with expenses. You will need to factor in stamp duty, legal and real estate agent fees as well as removalists. You may also require some storage if you want to keep some of your belongings that may not fit in your new home.
Lifestyle considerations are important
Moving to a smaller home comes with a change in lifestyle. A smaller space can mean less flexibility in terms of being able to have family to stay and if you are moving to a new area keep in mind, whilst it may be cheaper you often leave a network of family and friends. This can change your day-to-day routine, so you need to be ready for this. Leaving a family home can also be emotionally challenging. If you have raised your children and have special memories and a connection with your home it is a big step. On the flipside there are also some great places to retire to!
If you think downsizing may be for you be sure to get in touch. We can guide you through the process and do the paperwork so that you maximise any financial benefits you may be eligible for.
We have an experienced team of financial planners on the Sunshine Coast, Gympie, Brisbane and Ipswich.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
