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What You Need To Consider When Downsizing For Retirement

By Laura Anderson

Retirement can sneak up on you. It’s not all fairways and fishing though – there are countless details that need sorting before you can put your feet up, from your super to work obligations.

One detail that many Australians seem to gloss over is downsizing. Doing it right can free up cash to help you live more comfortably and generally reduce the amount of hassle your home creates.


Let’s say you retire and live a long prosperous life until the ripe age of 85. That’s 20 years of retirement, which The Association of Superannuation Funds of Australia estimates will cost $35,369 a year or over $700,000 in total (for a couple living comfortably).

Downsizing can help raise those funds by freeing up the equity you hold in your home. Of course for this to be effective you’ll have to buy something of a lower value, which generally means it’ll have to smaller, in a worse location or in worse condition.

Generally going for something smaller is your best option, as you won’t have to sacrifice the benefits of location or luxury, but your home may require less maintenance and cost less to run.


In past downsizing hasn’t been financially prudent for Australians for reasons relating to superannuation and pensions. That’s because your family home is exempt from assets test, but when you sell it the equity that you access is not.

If you were to access $253,750 as a single or $380,500 as a couple, Super Guide explains that the asset test would kick in and your pension would be steadily decreased. Luckily the government has reacted to make it easier for downsizers.

From July 2018 Australians over 65 will be able to deposit $300,000 (or $600,000 for a couple) into their superannuation fund from the sale of their family home. Under these circumstances, means testing is not affected, and other restrictions and caps on non-concessional contributions do not apply.


Moving into a smaller home could save you money in many ways. For one, the Australian Government estimates that 40 per cent of household energy use comes form heating and cooling and with a smaller home that cost will quickly decline.

A smaller, newer property and outdoor area means less maintenance, which could save you thousands of dollars and hours of work. Keeping a home up to scratch can be a time consuming and expensive task, particularly when you’d much rather be relaxing or enjoying your newly found spare time.


There’s no doubt that retirement and downsizing is a massive change. After 40 odd years of living a certain way, all of a sudden your days are different, and that can be challenging.

Think about what you’re going to do in your new neighbourhood and make sure your new home makes it easier. You’ll probably be spending more time with family, and you may also have more time for hobbies. Stay as close as possible to family if that’s the case. Being nearby the golf course, library, a popular sporting arena or even just your favourite cafe could help make settling into your new life much easier.


The decisions that you make when downsizing could have a huge effect on the way that the next 20 or 30 years of your life turn out. You need advice from local professionals that you can trust to ensure you’re retirement will be as relaxed and stress free as possible.

A real estate agent can help you find a property that fits your needs perfectly, and help you figure out what those needs are in the first place. Once you’ve made all the right decisions with the best help you can get, you’ll have all the time in the world to sit back and enjoy the results.

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