Downsizing Your Home: What You Need to Know
Downsizing for retirement can help you save money, simplify your life, and reduce the effort of home maintenance. If you are considering downsizing, this article will help you understand some advantages and disadvantages before giving you some great downsizing home tips to simplify the process.
What is Downsizing?
Downsizing is moving from one household to another that is either smaller or lower in value. According to Australian Housing and Urban Research Institute research, Australians aged 55 and over are the most common demographic to downsize their home. The main reasons Australians are thinking of downsizing their home is commonly in preparation for or during retirement; however, anybody can save money and enjoy the great benefits of downsizing.
When Should You Consider Downsizing?
Whether or not to downsize usually arises when your life situation changes. A family home that was once full of kids who have grown up and flown the coop, leaving behind a house that feels much bigger than it used to be. Suddenly there are whole rooms not being used, and it takes a lot of effort to keep the dust away from the clutter.
Naturally, a downsizing home is the answer to a home that no longer fits your needs or lifestyle.
Pros and Cons of Downsizing
While downsizing looks and sounds straightforward, there is still a lot to consider before going ahead. That's why we'll share with you some of the most important pros and cons of downsizing to help you weigh up your options and decide whether or not it's right for you.
- Increased cash flow: By downsizing for retirement, you can free up money to pay off your mortgage faster or to invest or spend as you choose.
- Less effort to maintain: A smaller home means less square footage to clean and maintain, leaving you with more time to do the things you want.
- Lower bills: A downsizing home costs less to insure and is cheaper to heat or cool.
- Reduced consumption: The smaller the space, the less room to store things meaning you will be less likely to buy something in the future you don't need, allowing you to save more.
- Lifestyle adjustment: If you have been living in a large house for a long time, adjusting to a new way of life might be uncomfortable.
- Less square footage: There will be less space for everything you own, so some difficult choices about what stays and what goes have to be made.
- Less space for guests: A smaller space could mean less room to entertain guests and fewer guest rooms if they are staying over.
Thinking of Downsizing? Try These Tips To Simplify the Process
If you are excited by the idea of downsizing or you’re ready to get started, we've gathered some great tips you can use to simplify the process. No matter the reason, these tips on how to downsize your home will help you efficiently declutter and organise.
Start As Early As Possible
Downsizing your home can be a long journey, so giving yourself plenty of time by starting early allows you to sort through your home without feeling overwhelmed by your moving date. It might feel daunting at the beginning, but starting as early as possible can eliminate all of the stress and worry that could come with starting too close to the moving date. Having more time can smooth out the process and enable you to go at your own pace.
What to Do With Sentimental Items
Organising the family home is bound to bring up some items that hold sentimental value and deciding what to do with them might be challenging if they don't fit into your downsizing for retirement plans. These items could include furniture or decor that you have an emotional attachment to or have been passed down through the generations. Try reaching out to family or friends who could give these special items a new home.
But what about those smaller items that can be more easily discarded such as children's artwork, sweet cards from relatives and graduation certificates? If you're going to miss these items but they just don't fit comfortably into your new home, memorialise them by taking photos and making your own digital treasure chest.
Take It One Room At a Time
Like one step at a time, you should approach your downsize one room at a time. This way, you can break down the whole process into more manageable tasks. You can create a plan for every room in the house and categorise what needs to be done in each, such as:
- Go through old DVDs and video games in the entertainment room
- Sort out the old pairs of shoes in the kids' bedrooms
- Trim down the wardrobe in your bedroom
- Organise small items like containers, pots and pans in the kitchen.
It also helps to start with smaller rooms like the laundry that are easier to declutter before building up towards those bigger, messier rooms like the garage. Having a clearly structured plan will also keep you on track and give you that sense of progression without feeling overwhelmed.
No Maybe Piles
Once you go through items and decluttering, it can be easy to make exceptions, especially for those nostalgic things that tug at the heartstrings but aren't necessary to keep. Probably the most important tip to remember while downsizing your home, you can save a lot of time and streamline the process by breaking down your belongings into 'yes' or 'no' piles, absolutely no 'maybes'. Setting this rule can save you long-term as you'll only be moving with those essential belongings.
Some handy questions to ask yourself as you decide what items go in which pile can include:
- Have you used it in the past six months?
- Will it fit in your new home?
- Will you use it often?
- Would someone else make better use of it?
Sell or Donate The Rest
Have you sorted through everything and found yourself with a very big 'no' pile? Now you can make some extra cash or give back to the community. Go through this pile and sort the items between what can be sold and what can be donated to charity. Some tremendous online marketplaces out there can help you find a new home for any items not making the move:
- Facebook Marketplace.
If you have a lot of old clothes or any other home items that were collecting dust, consider donating them to the following charities:
- St Vinnies
- Salvation Army
- Australian Red Cross.
Consider Your New Lifestyle, Not Just Your New Space
Having a clear goal for what you want to get out of your downsizing home can be a motivating factor to help you ease into your new life and location. Downsizing might offer you a new home, neighbourhood and a little extra money, but you can also gain a new way of living. Whatever your reason for downsizing, it helps to consider why you are going through the process than just saving money in a smaller home. Some questions to ask yourself can include the following:
- What opportunities will downsizing create?
- What will you miss the most about your old home?
- Are there new hobbies or activities you’d like to explore?
- What are you most excited about in this downsizing process?
- What are you most nervous about in this process? Are there any steps you can take to help?
- What is the first thing you want to do when you’re settled into your new home?
Don't Forget About The Costs
If moving into a new, smaller home is your next step, take the time to consider all of the costs that come with that. Some of the costs to be aware of include the following:
- Buying and selling in the same market
- Real estate agent fees
- Stamp duty
- Legal fees
- Furniture removal.
The Australian government offers eligible home sellers a financial incentive to downsize by allowing them to contribute up to $300,000 from the proceeds of the sale of their current home into their superannuation fund. A significant benefit of this is the potential tax savings, meaning you can draw down on your super as an account-based pension without paying tax on investment earnings.
As of January 2023, you must meet the following criteria to be eligible:
- 55 years old or older
- The home must be in Australia and have been owned by you or your spouse for at least ten years.
- You have yet to make a downsizer contribution to your super from selling another home or from the part sale of your home.
- Before (or at the same time) making your downsizing contributions, you must provide your fund with the 'Downsizer contributions into super form'.
Do you see yourself downsizing in the future? If so, we would love to be a part of your journey and have the perfect downsizing homes for retirees! Brighton Homes has a range of beautiful single story and narrow block homes that are the perfect size and design for your next chapter.