Are you assessing your requirements logically?
Just like a smart investor, a smart downsizer is someone who can make decisions with a cool head. Downsizing provides you with an opportunity to free up capital to finance your retirement and future health requirements. As such, it is integral not to let your emotions dictate your decision-making process. Here are a few key questions to ask yourself when assessing your requirements as a downsizer.
What stage are you entering?
This is the most important question, and should be the first question, you ask yourself. If you haven’t even reached your sixties yet but the kids have moved out, your requirements are going to be different to those of a downsizer ten or twenty years older than yourself.
You may not need particularly easy access to health services just yet. The healthcare system is already seeing, and is bracing for, a change in consumer behaviour as more and more people put off living in ‘retirement villages’ and the like. Instead, people are opting to live on their own until they require immediate and more high level healthcare. Therefore, services are beginning to see the need to change and embrace business models of bringing services to people. Even with this in mind, and considering your current age and health, do you see yourself requiring ongoing healthcare in the next ten or fifteen years? If not, this should influence your answer to the next question.
Where next, downsizer?
What sort of lifestyle do you want to live? The answer to this will help you decide where you move. You may want a sea change or country escape, and a quieter lifestyle. If your answer to the previous question about healthcare was that you would not require easy and ongoing access to it, then this expands the field of opportunities as to where you move.
Yet, many downsizers, rather than move to quieter surrounds, actually move closer to city centres so they can have easier access to cultural amenities. If this is what you are after, you need to factor in the rise in property costs that you will encounter when you move to more affluent areas. Will buying closer to the city leave you with enough money to reinvest or live on in the future? This is where a cool head comes into creating a realistic and considered budget/financial plan.
Forget the housing bubble, what about your bubble?
This question relates to your lifestyle in the next ten or so years. You may want to extend the ‘bubble’ you inhabit to one that includes more use of a car across greater distances. Or you may want to reduce your bubble size so that the things to which you want or need access are within either walking distance or are accessible by public transport or a short car trip.
What size home do you require?
When answering this question, consider any possible exceptions to how you will want to use your new home. Will you require an extra bedroom for guests, such as friends or grandchildren?
If you are moving with your partner, have open and ongoing discussions about the sort of lifestyle you want to share with them and how this may affect the size of home you buy. If you both want a more disposable income, then you may have to sacrifice on the size of your next home. After all, it isn’t called downsizing for nothing.
If you don’t actually want to reduce the amount of space you have, consider either moving further out to a similar but cheaper property, or remaining where you are and utilising your home’s close position to the city by leasing out a room in your home to tourists. If you do go down this road, read up on possible changes to tax and legal requirements for what are now, but may not always be, unregulated holiday hosting platforms.
Sweat the small stuff
Once you decide the location you are after, and what lifestyle you want to live, then you need to sweat the small stuff and see how the details of a house will meet your desires and needs. Are there stairs in the home and if so, are they manageable or after a year will it be a real burden on your enjoyment of the home? If you are in close proximity to shops and you can see yourself walking there, what is the walk like? Is it very hilly and does this matter at this point? Does the floorplan allow for easy accessibility and if it is a space in which you will spend considerable time, is there plenty of light and air to make the space a pleasant one to spend your time in? If you are after one, is there a garden, or space for one?