{"id":1732,"date":"2021-07-08T01:38:10","date_gmt":"2021-07-08T01:38:10","guid":{"rendered":"https:\/\/www.goldenyears.com.au\/?page_id=1732"},"modified":"2021-07-12T08:18:46","modified_gmt":"2021-07-12T08:18:46","slug":"4-key-decisions-to-consider-when-downsizing-for-retirement","status":"publish","type":"page","link":"https:\/\/www.goldenyears.com.au\/?page_id=1732","title":{"rendered":"4 Key Decisions to Consider When Downsizing for Retirement"},"content":{"rendered":"\n[et_pb_section fb_built=”1″ _builder_version=”4.7.7″ _module_preset=”default”][et_pb_row _builder_version=”4.7.7″ _module_preset=”default” background_color=”rgba(0,0,0,0)” background_enable_image=”off”][et_pb_column type=”4_4″ _builder_version=”4.7.7″ _module_preset=”default”][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat||||||||” text_text_color=”#747d88″ text_font_size=”16px” text_line_height=”1.9em” header_font=”||||||||” header_2_font=”Montserrat||||||||” header_2_text_color=”#ffffff” header_2_font_size=”42px” header_2_line_height=”1.3em” background_image=”https:\/\/www.goldenyears.com.au\/wp-content\/uploads\/2020\/09\/CoupleBalloonBench.png” text_orientation=”center” max_width=”970px” module_alignment=”center” min_height=”457px” custom_margin=”0px|||81px|false|false” custom_padding=”81px|506px||77px|false|false” animation_style=”slide” animation_direction=”bottom” animation_intensity_slide=”4%”]

4 Key Decisions to Consider When Downsizing for Retirement<\/h2>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.7.7″ _module_preset=”default”][et_pb_column type=”4_4″ _builder_version=”4.7.7″ _module_preset=”default”][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat||||||||” header_font=”Montserrat|700||on|||||dotted” header_text_color=”#ffd51c” header_font_size=”50px” header_line_height=”1.3em” header_2_font=”Montserrat||||||||” header_2_text_color=”#f7972a” background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_margin=”|||” animation_style=”fade”]

1. Why do you want to Downsize?<\/span><\/h2>[\/et_pb_text][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat|300|||||||” text_font_size=”17px” text_line_height=”1.8em” text_orientation=”justified” custom_margin=”-3px|||||”]

Downsizing to a smaller home must be done wisely and with time. When planning to downsize you need to consider the financial, social and emotional impact of your decisions. First, consider the reason <\/span>why you want to move.<\/i><\/b> You might long for a more luxurious lifestyle or a place closer to your family and friends.\u00a0 Be realistic about what you would actually do when day-dreaming about why and where you want to move.\u00a0 What facilities do you want to have in close proximity? What about proximity to care and medical services? As we age our care needs will increase. If you need care it is important to know how you can access those services, how much they would cost and how quickly you can access those services.\u00a0 Remember there is no right or wrong answer when it comes to downsizing. There is only the choice that is best for you. You have many options of accommodation available to you. Depending on your needs and circumstances you might consider downsizing to an apartment, townhouse, granny flat, aged care community, independent living, retirement community, mobile home or just a small low maintenance home. <\/span>Rachel Lane & Noel Whittaker<\/i><\/b> in their book titled, Downsizing Made Simple, recommend trying before buying. Before committing to moving in with your children give it some time before committing to the move, and when thinking about moving to a new community (retirement community, independent living or aged care community) renting for a period of time before buying is a safer option. As Lane and Whittaker (2019) note, \u201cSome people say rent money is dead money but if you rent for 6 or 12 months and realise that it really isn\u2019t for you the cost is likely to be a fraction of what it would have been if you had sold your home, moved and then moved again.\u201d (p.13)<\/span><\/p>\n

Based on analysis of the Australian Housing Aspirations (AHA) survey and interviews with older Australians and key stakeholders \u201colder Australians perceive \u2018downsizing\u2019 as more than just a move to a dwelling with fewer bedrooms, smaller land area and lower value. Rather, it refers to a residential move that meets their changing housing needs and is appropriate for the later stages of life. \u201c (James; Rowley and Stone 2020)<\/span><\/p>\n

Downsizing is usually associated with moving to a property that is more cost-effective, close to amenities, and easier to maintain but, as mentioned above, it can also mean reducing your belongings (decluttering)<\/a> as articulated by this downsizer \u2018Doing the downsizing is getting rid of the clutter, working out what furniture you really need \u2026 To be able to say, \u2018Well I don\u2019t use this anymore,\u2019 or \u2018I don\u2019t need this anymore,\u2019 and then being able to either sell it or give it to the family or give it to the op shop. It\u2019s got everything to do with furniture (Female, home owner). (James; Rowley and Stone 2020)<\/span><\/p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.7.7″ _module_preset=”default”][et_pb_column type=”4_4″ _builder_version=”4.7.7″ _module_preset=”default”][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat||||||||” header_font=”Montserrat|700||on|||||dotted” header_text_color=”#ffd51c” header_font_size=”50px” header_line_height=”1.3em” header_2_font=”Montserrat||||||||” header_2_text_color=”#f7972a” background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_margin=”|||” animation_style=”fade”]

2. Planning your pension for retirement.<\/span><\/h2>[\/et_pb_text][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat|300|||||||” text_font_size=”17px” text_line_height=”1.8em” text_orientation=”justified” custom_margin=”-3px|||||”]

The rules of the age pension system are continually changing. To be eligible to receive the pension you have to, firstly, be of pensionable age, which by 1 July 2023 will rise to 67. Secondly, Centrelink will use an assets and income test, and apply the one that gives you the least pension.\u00a0 And finally, you must be an <\/span>Australian resident for at least 10 years in total and there must be no break in your residence for at least five of the 10 years. It is important to note that some people may be exempt from the final rule. Services Australia further explains the <\/span>residence rules.<\/span><\/a>\u00a0 Other factors that can affect your age pension rate include your relationship status and\u00a0 income and assets from outside Australia.<\/span><\/p>\n

Your assets include everything you own – including your superannuation – with two exemptions. The big one is the home you own, then funeral bonds up to a certain value are also excluded from both the assets and income test. The age pension asset threshold , under which you receive the full pension is rather high but if your assets exceed the threshold your pension will be reduced. Pensioners may reduce assessable assets by spending money on their home, buying a more expensive house, travelling or gifting. These methods can reduce assessable assets but should only be used after much thought and professional advice.\u00a0<\/span><\/p>\n

The income test assesses all your (and your partners) sources of income, including your superannuation. Centrelink uses <\/span>deeming<\/span><\/a> to work out how much income your financial assets produce. This amount is added to your other income. Centrelink will then apply all your income to the income test to work out your payment rate.\u00a0\u00a0<\/span><\/p>\n

Eligibility for a part or full pension gives access to the Pensioner Concession Card – giving you cheaper medical costs, and depending on your location, concessions on utilities, council rates, public transport and vehicle registration.<\/span><\/p>\n

For those that want to continue earning some extra money after retirement, the Pension Work Bonus allows you to do so without affecting the rate of your pension. Pensioners can earn up to $300 a fortnight from wages or eligible self-employment income. Your income does not have to be below the $300 threshold each fortnight. Centrelink tracks the total annual income which can accrue up to $7,800. (* figures are current as of the date of this article)<\/span><\/p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.7.7″ _module_preset=”default”][et_pb_column type=”4_4″ _builder_version=”4.7.7″ _module_preset=”default”][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat||||||||” header_font=”Montserrat|700||on|||||dotted” header_text_color=”#ffd51c” header_font_size=”50px” header_line_height=”1.3em” header_2_font=”Montserrat||||||||” header_2_text_color=”#f7972a” background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_margin=”|||” animation_style=”fade”]

3. Superannuation and downsizing contributions.<\/span><\/h2>[\/et_pb_text][et_pb_text _builder_version=”4.7.7″ _module_preset=”default” text_font=”Montserrat|300|||||||” text_font_size=”17px” text_line_height=”1.8em” text_orientation=”justified” custom_margin=”-3px|||||”]

Growing and managing your super as early as possible for retirement is important. As an employee a percentage of your salary is set aside, if you are self-employed you can choose whether to contribute to your super, as a contractor or temporary resident working in Australia, you may also be entitled to super.\u00a0<\/span><\/p>\n

Throughout your career you will have had the opportunity to make contributions to your super but what happens after you retire? <\/span>Making a downsizing contribution from the sale of your home is one way to contribute to super after you have retired. If you are aged 65 and over you can contribute $330,000 ($660,000 combined for a couple) of the proceeds of the sale of your home, if owned for 10 years or more, into your super. <\/span>A<\/span>t present, if you are 67 and over,\u00a0 you can\u2019t make an after-tax contribution to your super, unless you meet a work test <\/span>that requires you to work for at least 40 hours over 30 consecutive days during the financial year in which you make contributions. After the age of 75, you cannot make further non-concessional contributions, unless you are selling your home.\u00a0<\/span><\/p>\n

The downsizer contribution is subject to some eligibility requirements:<\/span><\/p>\n