Downsizing with confidence
Deciding to downsize is a big life step. It is not just about moving to a smaller house. It can be about leaving behind a home full of memories, familiar streets and routines you have built over many years.
For many, the idea of simplifying life, reducing maintenance, and freeing up finances can be very appealing. But for some, the reality of downsizing does not always match the rosy picture. In fact, one in six people who have downsized in the last five years wish they had not made the move, so it’s important to give the move careful consideration to avoid “downsizer regret”.i
The financial appeal of downsizing has been strengthened by the government’s downsizer contribution scheme, which has been developed to encourage older Australians to release equity from larger homes and free up housing supply for younger families. Eligible homeowners aged 55 or older can contribute up to $300,000 from the sale of their family home into superannuation, or $600,000 for couples. This can provide a meaningful boost to retirement savings, but the considerations go beyond how the figures stack up.
The realities of downsizing
The costs add up
The financial boost from downsizing is often what makes it appealing. Selling a larger home can free up money for retirement, travel, or other plans, and topping up superannuation could provide a tax benefit.
However, you must consider all costs. Moving expenses can add up quickly. Renovations to make a new home suitable, such as improving accessibility, or modernising kitchens and bathrooms, can be expensive.
Finding the “right” place can also be a consideration, as appealing homes for downsizers – single-storey, low-maintenance and close to services – can be scarce and expensive.
Less space can feel restrictive
Downsizing literally means going smaller which can feel freeing at first. But a small home can feel restrictive if there is not enough space for hobbies, collections, or visiting family. Trading a large garden, spare rooms, or entertainment areas for a lock-up-and-leave lifestyle may reduce maintenance stress, but it can also feel like a loss of freedom.
Home is where the heart is
Downsizing can sometimes mean a move away from a familiar area. Leaving a family home and community connections can be deeply emotional, and a home in a new neighbourhood can feel isolating. Where you live can matter just as much as the house itself.
Watch the impulsive purging
Many people experience regret after decluttering too quickly. In the rush to simplify, sentimental objects, practical tools or furniture, may be thrown away or donated, only to be missed later. Taking your time to evaluate what items to keep, or place in storage, can prevent feelings of loss.
How to avoid downsizing regret
Careful planning can make a huge difference to how you experience downsizing. Here are some strategies to help make the move feel more positive:
Take your time – Give yourself time to adjust emotionally, financially, and physically. Explore your options and imagine daily life in a potential home before committing.
Think about future needs – Make sure your new home can support the activities you value – whether it’s your hobbies or hosting family and friends.
Budget for hidden costs – Factor in moving expenses, agent fees, renovations, and strata or service charges.
Keep treasured items in mind – Don’t discard sentimental or useful items too quickly.
Stay connected – Consider proximity to family, friends, shops, and services to maintain social connections or, if you are planning a significant change of scenery, think about how you’ll develop personal connections in a new location.
Downsizing can be a smart financial decision, especially considering that government incentives may allow contributions to superannuation. However, it’s important to remember that these contributions could impact any Age Pension entitlements. We are here to assist you with the financial side of things.
Remember, it’s not just a numbers game. Emotional attachment, lifestyle changes, social connections, and practical needs all play a role in whether a move to downsize feels liberating or limiting. Taking time to plan, reflect, and consider how and where you want to live, can help ensure downsizing brings freedom, comfort and happiness rather than regret.
Contact Carrick Aland’s Wealth Planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
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