I’ve recently written a couple of blogs on downsizing and accessing money from the equity built up in our family home. For many, this wealth has increased substantially over the past year or two.
Our 27 May 2022 article, “Are downsizer contributions achieving their purpose” focused on whether the concept of allowing people selling an eligible home to make additional “downsizer” contributions to superannuation had achieved its intended purpose.
Also, our article “Having your cake, and eating it too” published on 9 December 2021 considered how people could use the equity in their home to deliver additional income in retirement.
In this post, I want to look at some of the “not-directly-financial” themes around downsizing.
What is downsizing?
In general terms, the concept of downsizing involves moving from a larger home to a smaller one, or to alternative accommodation.
Downsizing is not necessarily price-driven, but often the reason for downsizing is to free up extra cash. However, in some situations, a person may move from a larger home to a smaller, yet more expensive, home.
For the purposes of this post, let’s accept that downsizing means moving to a smaller home.
There are several reasons why people choose to downsize. These might include:
- the current home is simply too big for our needs,
- the costs of maintenance and upkeep of a larger and possibly older home,
- time and physical activity required to carry out repairs, cleaning, and maintenance,
- the rising costs of gas and electricity for lighting, heating, and cooling,
- restricted accessibility due to age and changing health – e.g. steps and stairs, narrow hallways, etc.
- proximity to services (shopping, medical facilities, transport),
- the changing character of a neighbourhood (e.g. changes in zoning to higher density residential, commercial or industrial)
Common objections to downsizing
Whenever the topic of downsizing comes up in polite conversation several objections arise.
Often an objection will be “I need a big house to store all our stuff”.
That then introduces an entirely new topic around the amount of “stuff” we own.
Now, in the interests of full disclosure, I admit I am a “closet” minimalist.
Minimalism is about “less is more” and simplicity.
It is about only owning things that add meaning, purpose, and functionality to our lives – it’s quality over quantity.
Minimalism does not require people to go without things and live a frugal or austere life. But for some, those characteristics may be present.
Practicing minimalism is a very personal trait.
Many will be familiar with the work of Marie Kondo who has become popular in the past ten years and is known for promoting the concept of minimalism and living a decluttered and organised life with less “stuff”.
While the debate about decluttering can be very raw and emotional, I think a healthy approach to revisiting what we own and of that, what we really need, can be a liberating experience.
Another objection to downsizing is more emotional “I have great memories of living in this house”.
This can be challenging to deal with, and each person will handle it in their own way. For some, the thought of moving from their current home will simply be too painful. For others, after a time of thoughtful contemplation, the idea of moving may be more realistic. The thought of moving to a new home can often lead to an exciting new leaf in a person’s life.
Is downsizing only for old folks?
While much of the discussion about downsizing our homes is directed at older Australians, the concept is equally relevant to all ages.
With the cost of housing being what it is in Australia today, and the threat of increasing mortgage interest rates, the thought of moving to a smaller and cheaper home has a lot of attraction.
This is particularly appealing, even with a growing family, when aspects of minimalist living are introduced into the conversation. It is a case of thinking “outside the dots” and imagining what life could be like if living arrangements were to be simplified.
There is a lot of good content on downsizing, decluttering, minimalism and living a simpler life available on YouTube. Just type one of these keywords into the search function and see where it takes you.
(Realise Your Dream)
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.