Don’t downsize your nest egg

Five must-dos when looking to downsize the family home, so you (and your loved ones) don’t lose what you’ve worked hard to build.

That brand new apartment with the modern finishes, the tennis court and BBQ area that’s free to use, the daily walks on the beach and coffee at your new favourite local cafe: it all sounds perfect. Not to mention the tax-free cash profit in your account from selling the family home. Downsizing is an appealing idea for many older Australians as they look to cash in on decades upward property prices and spend their retirement in style. But the reality might not match your expectations. Here are five things to consider when to avoid downsizing more than your home. 

Be realistic

The idea of daily walks on the beach followed with a coffee at your new favourite cafe might sound appealing, but that might not be the reality. Do thorough research in suburbs you like to see what properties have sold recently and for how much. Chances are, you’re not the only empty-nester eyeing off that sea change, so prices might be out of your reach. The second reality check is your own home: is it really worth what you think it is? You’ve not only put your hard-earned money into the house, you’ve invested emotionally. That could well mean your back-of-the-envelope valuation is off a bit, so get at least three opinions to give you a reading of what your home is really worth. 

Get financial advice

There are a number of considerations for retirees to think about to protect their future sources of income. Surplus cash from the sale of the old home could land you a nice tax-free gain, but is that enough to live off? Will your future living arrangements affect your pension, if you’re entitled to one? These are questions that should be answered by a qualified financial planner before you put your home on the market. 

The real costs 

You’ve got an attractive valuation on your home and you jot down that number. Minus the purchase of the new home and you’re thinking the numbers look great. But add in stamp duty, conveyancing fees, and agent’s commission, and that pile of cash from the sale is shrinking fast. Then the agent advises that you should do a few minor repairs, a new coat of paint wouldn’t hurt, to boost the sale price. Then what other costs have you not considered? Is the new home ready to move into or will you have to rent somewhere for a while? What about storage? Or the cost of minor building works to get your new home up to scratch? This can all add up very quickly and turn a rosy picture into a financial nightmare. 


Does the new home cater to your changing needs as you get older? That top floor apartment has great views, but with restricted mobility, you’ll want to make sure it has lift access, space for mobility aids to manoeuvre and perhaps the ability to make minor modifications to support your independence as you get older. The key question: is this place going to be comfortable in 10 or 20 years from now? It’s a tough scenario to think about, but considering the investment and energy needed to make the move, you want this to be your ‘forever home’.

A smaller home doesn’t mean reduced costs 

Depending on the location and type of home you’re moving into, there could be a number of new fees and ongoing costs to consider. If you’re moving into a block of apartments or shared living, what are the strata fees and any contributions to the maintenance of shared facilities? How do council rates compare to what you’re currently paying? You might also want to look into insurance premiums or levies if you’re moving somewhere nearer the coast or in a fire-prone suburb.  

Emotional costs 

The house you’re selling may well have been your family home for years. You can probably recall momentous life events that happened there – moving will not be easy. Make sure you think long and hard about those cherished memories and how you’ll carry them with you. You probably also have a greater attachment and roots in the neighbourhood than you realise. You have a favourite cafe, you know the butcher, you know who to call when the fridge packs it in, and you might have had long associations with local sports clubs or community groups. All these connections are what make a community. Research your new neighbourhood to see what support networks you can tap into, and maybe even spend time there to see if it has the makings of a community you can be a part of.