Retirement is an opportunity to assess where you live and how you want to live.
Questions to help you decide where to live
Retirement may be a time to think about whether you want to stay where you are, downsize or move into a retirement home.
Your children may have moved out, and the family home now seems too big. Perhaps you no longer want to be responsible for running a house.
Or your health may not be as good as it used to be, and you need a bit more help. You might see an opportunity to reduce rent or loan payments.
Whatever your circumstances, you could consider your living arrangements by asking yourself some key questions, including:
- What is my present financial situation? (For example, do I own or rent, do I have debt, am I financially responsible for someone else?)
- How is my health now, and should I plan for future health care needs?
- Do I want to stay near family and friends?
- How much room do I need?
- What kind of lifestyle do I want?
If you own your home
Staying in your home
Staying in your own home, at least in the early years of retirement, has plenty going for it. You know your community and it might mean you stay close to family and friends. You are likely to have an emotional attachment to your home and the geography. Familiarity can be very comforting.
If this is your choice, things to consider include:
- Do you, or will you in the future, need renovations or upgrades to bathrooms, kitchens, or other areas of the house to make living easier? It might be replacing steps with ramps or installing more rails in the bathroom to help with your independent living.
- Do you need help with daily chores such as cleaning and shopping? The government provides services such as the Commonwealth Home Support Programme.
- Are you considering refinancing your home, or using your home equity, to help fund your retirement?
Some of these questions are complex and your decisions could affect your partner, family and anyone you live with. Consider speaking to us before you make big financial decisions.
Downsizing in retirement
There are many reasons you may consider downsizing, including being closer to health services, or if your home needs costly improvements.
Downsizing is also a way to free up cash for your retirement. But it does come with costs and may impact your Age Pension and government benefits.
Maureen and Gary downsize their home
With their five kids out of home, Maureen and Gary were starting to think four bedrooms and a big backyard was more than they wanted to maintain. They worked together to figure out their options. Using online tools and checking in with their super fund and bank, they looked at what they owned and what they might need when they stopped working. After weeks of discussion, they decided to sell their home and buy a smaller apartment with no stairs. Even after transaction costs, they felt they would be in a stronger position and better off financially and emotionally.
If you rent your home
Rent is a big, ongoing expense for many retirees. If you rent your home, think about whether you can afford the rent when you stop working. You may have less income in the future.
If the private rental market is too expensive, there are lower rent options. Community organisations sometimes offer cheaper rooms or units for retirees who do not own their home.
If you receive a Centrelink payment, you might be eligible for Rent Assistance.
For advice about staying in your rented home, contact your state or territory tenants union:
- Australia Capital Territory — Tenants’ Advice Service ACT
- New South Wales — Tenants NSW
- Northern Territory — Darwin Community Legal Service Tenants’ Advice Service
- Queensland — Tenants Queensland
- South Australia — RentRight SA
- Tasmania — Tenants’ Union of Tasmania
- Victoria — Tenants Victoria
- Western Australia — Tenancy WA
If you need help with housing or other support, see get help in retirement.
If you need to move into residential care
Help at home and aged care options
If you need help in your home, or can no longer live independently, the Australian Government provides a range of subsidised aged care services. There are also many privately run retirement homes and villages, but you pay the full amount yourself.
Before you sign up, check all the fees and charges, and how they may increase over time.
If you’re buying a unit in a retirement village, get advice. Make sure they have experience with retirement village contracts and the Retirement Village Code of Practice in the state or territory.
Key takeaways
- If you own your home, consider your wants with your needs – a different lifestyle, close to family, health needs – to free up your capital.
- If you rent, see if you’re eligible for rent assistance and include rent in your budget.
- Create a budget for ongoing household expenses, matching it to your income sources. Remember to include inflation (price rises) of products.
- If you’re looking to downsize, consider the costs involved to make sure you will be financially better off.
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/plan-for-your-retirement/your-home-in-retirement
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
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