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Downsizing FAQs

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Our retirement planning specialist answers some of you most frequently asked questions

Deciding whether to downsize is a big decision. We have answered some frequently asked questions below that you may have when it comes to considering the move to downsizing.

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Is downsizing right for me?

Although the thought of downsizing your home for retirement is daunting, it can also be seen as an opportunity to reassess your situation. Asking yourself the following questions will help:

  • What do you like about where you live now?

  • Could you survive with less space?

  • Are the cleaning and maintenance getting too much?

  • What financial implications will I have?

  • What are the advantages and disadvantages?

Will selling my home affect my Age Pension or government benefits?

Downsizing doesn't just mean a move to a smaller home. It can also have a significant impact on your Age Pension or other government benefits that you are entitled to. The assets test and income test are the two key factors that decide your eligibility and the amount of benefit you receive. Careful consideration must be taken before making any decision that may reduce your entitlement to these benefits. While your residence is not included in the assets test, selling your home to buy, build or renovate another one can still affect your eligibility. Exemptions are available but its best to seek financial advice to make sure.

What are the alternatives to downsizing my home?

If downsizing your home isn’t a viable option, there are several alternatives to consider to make the most of your current property. One option is to rent out a portion of your home to supplement your income and help you pay off any outstanding mortgage or other loans. For those who need more space and additional income, dual occupancy could be an attractive choice. And for those who want to access their home's equity without having to downsize, there’s equity release, also known as "reverse mortgage". This type of loan can provide you with regular payments or a lump sum against the value of your property.

What is the next step after downsizing?

Downsizing can be a great way to free up capital, but it can also lead to uncertainty about what to do next. Renting for a while can be a good option, as it allows you to explore a new area and see if it suits your lifestyle. For those thinking about retirement planning and investing their newly freed-up capital, there are plenty of options available. Additionally, seniors may be eligible for the Commonwealth Home Support Programme, which can assist with daily tasks and support independent living. Having a solid financial plan in place is what matters, so seek advice from the experts if you need it.

Can I gift an inheritance to my children after downsizing?

The most important thing to do before deciding to let your children have their inheritance early is to work out whether you will be leaving yourself with enough to live on and enjoy a decent lifestyle for the rest of your life. This is especially the case if moving into residential or aged care. You may need to consult a financial planner to decide this.

Is a retirement village the same as an aged care facility?

In short, no they aren’t. Retirement villages offer independence and flexibility with residents able to travel regularly and maintain an active and social lifestyle. They provide maintenance and landscape services and often offer amenities such as swimming and exercise facilities, cinema and recreation rooms, cafes, community gardens, guest suites and guest parking. A residential aged care facility offers 24/7 nursing staff and is ideal for those unable to live independently, who need regular medical care and would benefit from services such as scheduled meals, laundry and room maintenance. Many have additional features such as a garden, cafe, cinema room, swimming pool, beauty salon and library.

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