The promise of retirement downsizing is a delectable dream: no lawns to mow, a low-maintenance lifestyle, a hefty mortgage paid off, and cash left over for travel and fun. But for many Australians, the reality is a transition “soured by a lot of things that happened along the way,” turning into a “claustrophobic nightmare”.
The good news is that many of the downsides—from financial shocks to emotional regret—can be avoided with careful planning and due diligence. The goal is a successful move, which requires addressing both the push and pull factors.
Here are seven practical steps to avoid the common pitfalls of retirement downsizing:
- Abandon the ‘Off the Plan’ Dream
Avoid buying a new apartment ‘off the plan’ if possible. Instead, buy something established. This allows you to inspect the finished product, verify dimensions (as original plans may be “for illustrative purposes only”), and check for pre-existing defects. As retired businessman Allen Holloway found, defects can be “very slow to be rectified,” potentially involving severe issues like apartment flooding.
- Scrutinise Strata Governance and OC Costs
The loss of a mortgage can be a big landmark, but it is often replaced by OC levies that “can be just like paying a mortgage”. These levies can range from $1,500 to over $20,000 a quarter. Before buying a unit, thoroughly investigate the strata scheme and its building management committee. Be wary of long-term contracts that limit owners’ say in how the building is run, or where the developer dominates the committee.
- Demand Clarity on All Amenities
Do not assume every amenity is included in the purchase price or strata fees. Allen Holloway and his wife were unaware that they had to pay extra for access to the gym and pool in their building. Get every amenity and its cost explicitly detailed in the contract.
- Choose Location Over the Lowest Price
The pressure to save money can result in downsizers moving “too far” from their old neighbourhoods. This risks feelings of dislocation and loss, and a significant drop in quality of life. Prioritise staying close to family, friends, and support networks.
- Select Your Community Wisely
If community diversity is important, be cautious of age-restricted villages. Retired nurse Felicity Jacobson found that moving into a retirement village meant being surrounded by “all old people,” missing the multicultural and creative community she left behind. Also, if considering a retirement village, understand that you are often leasing, not owning, your home, which limits your ability to make decisions.
- Create Substitutes for Lost Hobbies
A major source of regret is losing space for hobbies, such as a backyard for gardening or a garage for DIY projects. Instead of lamenting the loss, seek substitutes. You could join a communal garden or a local Men’s Shed to replace the time spent “pottering around with a project”.
- Prepare for the Financial Trade-off
While financial benefits exist, Peter Moorehouse was horrified that his old house’s value increased significantly while his apartment “appreciated barely at all”. Understand that you may be trading future capital growth for a lower-maintenance lifestyle, and ensure this trade-off works for your long-term financial plan.
By doing extensive homework on the property, its governance, and the community, you can reclaim the dream of a carefree, downsized retirement.