For the generation approaching retirement age, late entry to superannuation means often the family home is the main nest egg.
Fortunately property prices have risen over the years. If you are looking at downsizing, you will hopefully find your house and land will be of enough value to allow for leftover cash after your sale. This cash can be used either to invest or to fund your lifestyle.
Selling the family home
The simplest way to unlock cash is to downsize.
The better condition your home is in, the faster the sale will be and the higher the price. Once you decide to sell, it is a good idea to get some advice on adding the modern touches a young family may be looking for such as indoor / outdoor living and open plan spaces.
You may still love the colour you painted the bedrooms back in the eighties, but switching to a more neutral palate is an affordable way to attract more buyers. The blank canvas allows them to picture your home as theirs – even if the idea feels very strange to you!
It can be an emotional process to downsize but you will be freeing yourself of the responsibilities of a large home and opening the door to a more financially flexible future.
Choosing somewhere new
Retirement village living is one option for those over the age of 55. This offers a convenient lifestyle with close proximity to medical help and a strong sense of community.
Retirement apartments are generally very affordable – but check the small print! There is usually a hefty exit fee on selling, as well as ongoing costs for living in the building.
Many new retirees don’t feel they’re ready for the shift to retirement village living. In this case, downsizers are recommended to look for a home or apartment with easy access and all on one level.
When apartment shopping, aim for walking distance from shops or bus stops so you won’t have to spend a lot of time travelling. Look for what suits you – for example you may feel safer if you have access to a secure underground car space or you can seek out a block with a gym if you enjoy staying fit.
Other options to fund your retirement
An increasing number of Australians are choosing the granny flat option, building a small unit at the back of their grown children’s property. It can make financial sense to pool resources and choose go down this road but it may also mean being kept very busy with the grandkids!
Other pre-retirees choose to draw on the equity sitting within their family home to invest in one or more smaller properties. Doing so can enable financial growth, even after retirement, especially if you are able to plan ahead and start investing well before you ‘down tools’ and start living the easy life!
The decision of how to finance your retirement depends on you, your family, your lifestyle and your circumstances. There is not a one-size-fits all solution. If you do own a home and have some superannuation up your sleeve, the good news is you have plenty of options!
Your local LJ Hooker Home Loans property lending specialist will be able to discuss what is the best plan for you, no matter how far off retirement you are.
And if you’re looking at options and want to figure out buying and selling costs or need a great budgeting tool, check out our handy calculators here.