Downsizing In Retirement
You may be planning a sea or tree change during retirement, looking to move closer to your grandchildren, or you may just want to simplify your life. An Adviser can assist you by determining the financial implications of keeping or selling the family home.
Making sure these are the best years of your life
An Adviser can assist you by determining the financial implications of keeping or selling the family home. Clients that seek our advice are ahead of game in their retirement because each and every client we help gets clarity on the burning questions like:
- Are my goals achievable?
- Am I on track?
- Will I have enough?
- Will I lose the Pension?
TALK WITH A RETIREMENT ADVISER TODAY!
Financial aspects of downsizing
1. Unlocking equity
Seniors can find themselves asset rich but cash poor. Selling up and downsizing could be a good way of finding usable cash.
2. Less maintenance
Settling for a town home or a lifestyle village generally means theirs less demand for you to pull out the mower every week
3. Some bills may be reduced
Community living often comes with reduced rates or if you prefer to maintenance ownership and privacy a smaller home will generally mean less costs.
4. Purpose for remaining equity
After selling costs, a large sum of money is often kept in a cash account, however there may be more advantageous ways to hold that money.
5. Centrelink
There's a minefield of information out there in regards to social security payments. Income and assets tests apply. Having extra cash could put you above the thresholds.
Downsizer Contribution to Super
Why Super?
- Low Tax Environment
- Balance is invested - Has the ability to generate more then cash but taking a low level of risk
- Elect to take regular income payments to unlock tax free investment earnings
How it works
- Aged 65 or over (expected to decrease to aged 60)
- Contributions arise from the sale of a person's main residence
- The residence you are downsizing from has been owned for at least 10 years
- Contribution of up to $300,000 for a single person however a couple can make a super contribution of a total $600,000
- Must be made within 90 days of settlement
- Once off strategy - haven't done the downsizer contribution before
Centrelink Considerations
- A person’s main residence is generally exempt from the assets and income test
- However, selling the main residence and depositing the surplus sales proceed to a bank account, allocating to other investments, or making a downsizer contribution to super may result in amounts that have previously been exempt from the assets and income tests now being assessed
Let us help with making the decision to sell the family home
Let Astute Guide You
At Astute we specialise in helping hard working Australians live the retirement we know they deserve, enabling them to achieve their dream retirement.
That's why we work with you and uncover your financial situation and create a strategic plan that enables you to live your retirement to the fullest.
You have built up your nest-egg but are still worried about what is ahead. You may be worried about how long your money may last you and are there any things you can do now to make sure your retirement is bright.
We will help you to prioritise your lifestyle goals and consider how much they will cost. We will be by your side when you make big decisions as your life changes. It’s about receiving the right help at the right time.
Now that your superannuation fund will no longer be added to, we will help you consider the best ways for you to draw this down to assist with your lifestyle. We will discuss with you how much investment risk you are currently taking, and whether this should be changed considering your future needs.
You may need assistance in how to qualify the appropriate amount of Centrelink. We will help you understand what is available as well as strategic ways to get the most you are entitled too considering your goals and objectives. You may even be thinking of passing on assets or wealth early to your family. We will discuss with you the appropriate ways to do this especially considering Centrelink ramifications.
You may wish to downsize your home. We can be very helpful in discussing the Centrelink affects, and how this money can be used. Downsizing involves considering how you want to live in an appropriate property as well as the financial impact on you. You may even qualify to top up your superannuation account. We can assist you to make the right decision before you choose to make the big move.
If an unexpected event occurs, like a medical event, we will make sure you have the right plans in place to help deal with being able to fund rehabilitation and to make sure finances are in order. We will also help you plan if you were to pass away so that your spouse or family is looked after. By putting a plan in place, it will give you more certainty that your assets are passed to the right people at the right time.
Success Stories
Downsizing
Tom and Christine have been empty nesters for 20 years now in their 70s now was the perfect time for them to move on from their family home. Tom had a few stints in hospital from mowing accidents and Christine was unable to go upstairs because of her knees.
With their house paid off at a current value of $650,000, and some money in cash ($120,000), they wanted to get an opinion on how to best utilise their money. It was fair to say most of their life savings was tied up in their home.
We discussed with them their lifestyle goals, and how they want to spend their retirement, we concluded that a retirement village was what they needed. The Brand new lifestyle village 2 minutes drive from their grand kids seemed perfect. With a purchase price of $450,000 Tom and Christine had 200,000 left over from the sale of their home.
Because time with the grand kids was high on the list as was a relaxing holiday at least on a yearly basis. They decided to go on a holiday to Fiji with there whole family which costed them $20,000 and bought a Caravan so they could travel Australia.
We helped them to restructure their assets so they could now qualify for an age pension, and also have some more certainty of income in retirement. They were also able to have the holidays they wanted and spend time with the grandkids. They were able to include all the items they wanted in their retiring years and still be able to live in comfort knowing their money was going to last for a long time in the future.
We know it's difficult to get started that's why we offer a no obligation discovery chat to help you take the first step.