Rightsizing is a process many retirees will have to go through at one stage in their lives. But what is it and what impact can it have on how you live out your future?
Downsizing isn’t about living in a tiny home – unless of course you want to. Instead, it’s about rightsizing your home for the next chapter in life.
That’s the opinion of personal finance expert Noel Whittaker who recently teamed up with aged care guru Rachel Lane to write a book, Downsizing Made Simple, which seeks to investigate the issue.
Aveo partnered with the pair in an online masterclass, Everything you need to know about retirement community living. Moderated by Starts at 60 CEO Rebecca Wilson, the panellists discuss how downsizing can impact your pension and finances, the costs involved in retirement living, understanding retirement village contracts and more.
The webinar invited viewers to submit questions of interest a selection of which are featured here.
What type of retirement living option should I choose?
You have an amazing range of options available to you. You may want to buy a new freehold home; move into a strata-title apartment or townhouse; choose a retirement community; explore a mobile home; or establish a granny flat or other collaborative living arrangement.
Remember, there is no right or wrong or best when it comes to downsizing decisions. There is only the one that best suits you.
What if I'm not ready to take the plunge?
When did you last live with your children? If you’re thinking of moving in with one of them – and their partner – perhaps you should give it a whirl before you commit.
Similarly, if your next move is to a new community, it may be wise to rent for a period of time before you commit to buying.
If you’re trying to find the right retirement community, the thing that will most influence your ability to enjoy the village is probably going to be something you can’t see or touch – to quote that great Australian movie The Castle: “It’s the vibe”.
Many communities have open days and functions people considering moving to the village can attend. Do it. Some communities let people try before they buy. If this option is available, seriously consider moving in for a short stay.
This will be the best test for whether you will enjoy living in the village.
I think that I am ready to begin downsizing, but what should my first priorities be?
Where you live affects how you live, and it’s one thing you can’t change without moving again.
You might long for a sea change or a tree change. If you dream of spending hours walking along a beach or days in the mountains reading a book in front of an open fire, ask yourself if these things you will actually do? As you age, are your capabilities changing?
Do you want to be near friends and family? You may want to move closer – or further away from – certain people.
And what about proximity to care and medical services? You may be fit and active now, but if that changes you will want to stay at home, in the place you know and love.
Take time to think about what activities you enjoy doing, or hope to enjoy doing. Bear in mind the more facilities and activities the village provides, the higher the ongoing service charges are likely to be.
If I buy in a retirement village am I considered the homeowner for aged pension terms?
Whether or not you are a homeowner depends on how much you pay. If you move into a retirement village and you pay less than $214,500 you are not considered a homeowner.
The amount you’ve paid for your home is included in your pension assets but as a non-homeowner you get an extra $214,500 in the asset test threshold. The benefit of that is that you may then be eligible to receive rent assistance based on the ongoing amount that you’re paying to live in the village.
In the event you pay more than $214,501 you are considered a homeowner for pension purposes therefore the normal rules apply. Your home is an exempt asset and you will need to meet homeowner asset test threshold.
You will not quality for rent assistance.
Do retirement villages typically charge to pass the contract to you for sighting prior to you signing such a document?
No. When it comes to the ingoing bucket, sometimes there can be fees to have your contract prepared or have your leasehold registered on the operator’s title. However, it is almost unheard of for the operator to charge you to look at the contract or to withhold that type of information. On that note, it is also worth noting that with most retirement village contracts there is a legal clause that means operators can’t let you sign within a certain time frame of receipt of the contract. This is to protect against rash decision making.
To watch the full version of Everything you need to know about retirement community living, click below.