If you’re planning on downsizing for retirement, you’ll want to consider a few things before you make the move.
Here’s how you can prepare yourself both financially and in terms of packing up your home before you make the big move:
Plan your end goal
If you’re downsizing with the intention of retiring, it’s a good idea to look at the bigger picture before you get stuck into the nitty gritty tasks that are involved in downsizing. For example, do you know the financial implications of downsizing? Have you decided where you’re going to move? Do you have a target sale price in mind for your current property? Do you need to make a certain amount of money on your property sale to retire comfortably? Before you downsize, it’s a good idea to have a financial plan locked in. Everyone has different end goals when it comes to retiring. If you’re unsure about the effects that selling your property could have on your retirement plan, it’s a good idea to talk to a local expert. A good real estate agent will be able to 1) help you understand the financial effects your sale will have on your retirement, 2) talk you through current market conditions and 3) help you prepare for sale and move. You can compare real estate agents at LocalAgentFinder.
Consider your financial situation
The good news is, as of 1st July 2018, Australians sellers over the age of 65 years will be eligible to deposit up to $300,000 of the proceeds of their sale into superannuation. It’s important to note however that a contract of sale cannot be exchanged before 1st July 2018 to qualify under the new legislation – the settlement date does not count, only the date that the contract is signed. Also, every $100,000 generated by selling the family home reduces age pension entitlement by $7,800 a year. So, while investing the money in superannuation may help reduce ongoing tax bills, it won’t compensate for losing age pension entitlement at such a high rate. For more information on downsizing contributions, you can visit the ATO. Here are some financial considerations to be aware of when downsizing for retirement:
- A smaller place isn’t always cheaper
- Selling could impact pension entitlements, as mentioned above
- The current property market might not be ideal to achieve the best price for your home sale
Is now the right time to sell?
If you’re looking for a sea or tree change, you’ll probably want to sell your property. However, it could be appropriate to hold off on your property and rent it out until selling conditions are better.
- Marketing conditions – are you in a buyer’s versus a seller’s market?
- The location of your property – the best time to sell could differ depending on whether you own a metropolitan, coastal or inland property.
- Time of year – traditionally, spring has been known to be the best time to sell, but your property may attract more people in other seasons.
- Your personal and financial situation – if you’re under any existing stress, selling now could better or worse it.
You can find a real estate agent by comparing agents at LocalAgentFinder and discuss whether or not now is the right time for you to property on the market.
Prepare for your move
Once you have your financial plan sorted, you can start getting physically organised for your move. The biggest mistake you can make when downsizing is accidentally throwing out something you cherish. So, before you start packing things up, it’s a good idea to write a list of everything you own that is important to you. This could include photo albums and frames, photo hard drives, filing, artwork, jewellery and special gifts. If you’re getting ready to sell and downsize within the next two months, you can get organised by downloading LocalAgentFinder’s handy moving checklist. You’re able to download it, print it and tick off each moving task as you prepare for the big day.
Sell, recycle and throw out unused items
As hard as it is, there’s a strong chance you’re going to have to say goodbye to some preloved items. Rather than simply binning, you could start off with passing on furniture to family or friends. This way, you know they’re going to a good home, and not to waste. Secondly, you can donate second hand clothes, furniture, books and other items to your local op-shop. In terms of throwing out, there shouldn’t be much left. Only the things that can’t be used by family and friends, or recycled.
Pack your necessities ahead of downsizing the home
When packing away your necessities, a good rule of thumb is to only keep one of each item. This works well for items such as:
- Kitchen utensils
- Electronic appliances
- Cleaning equipment
- Cutlery and crockery sets
- Gardening supplies
Be smart with your storage when downsizing your home
For those items that you can’t let go of, it’s a good idea to purchase some large plastic containers that you can label and put into storage cupboards. This way you can stack them nicely and
Find the right real estate agent to help you downsize to a smaller home
Finding the right real estate agent will alleviate a huge amount of stress when it comes to downsizing and selling your home. They’ll be able to help you with the following:
- Choosing the right method of sale
- Pricing your home
- De-cluttering and staging for inspections
- Marketing your home
- Negotiating with buyers
- Achieving your goal sale outcome
You real estate agent may also have some properties in mind that you might be interested in if you’re looking to purchase a new home. If you’re looking to find a great real estate agent who can help you downsize your home ahead of a sale, you can compare real estate agents at LocalAgentFinder, including their commission rates, marketing fees, sales history, individual performance reviews and more. If you’d like to compare real estate agents, visit LocalAgentFinder.com.au