Time to read : 5 Minutes
You’ve worked hard your whole life, raising a family, building a career, and working towards retirement. Now, as you start to think about the next chapter, you might be wondering if a sea or tree change could give you a slower, simpler lifestyle, and financial independence.
For many Aussies, moving away from a city hub to a regional, coastal, or countryside location has helped them make their retirement income and savings go further. A new lifestyle can allow you to enjoy the next chapter in your life, on your own terms.
If the sounds of birds or crashing waves are tempting you to pack up and move, here are some pointers to think about.
What are the benefits of downsizing?
If you’re living in a large family home that’s now way too big for you, one of the benefits of moving is the opportunity to downsize.
A smaller house will be easier to maintain, which frees you up for more time to make the most of your retirement. It also gives you a chance to find somewhere that’s more convenient for your life stage or conditions. For example, if you have a bad knee, you may not want to climb stairs anymore and a single-storey home may be easier for you.
Downsizing allows you to take advantage of your hard work to build equity in your home. By now, you’ve hopefully paid off some – if not all – of your mortgage. And depending on how long you’ve owned your home, there could be some significant capital growth, which can put you in a better cash flow position for the future.
Finding a smaller, cheaper property in your new location will also mean lower bills overall, as smaller homes are generally cheaper to heat, cool, and for rates and insurance.
Less outgoings, and any equity you’ve been able to free up, means you can bolster your retirement savings, reduce your debt, or allow for a more flexible lifestyle, which can make your retirement even more enjoyable.
Be aware: if you are 55 or older, you may be able to contribute up to $300,000 from downsizing into your superannuation fund, but you should talk to a professional if this is a good move for you.
How to choose your location
The dream of waking up to ocean views or rolling hills in the country is incredibly tempting, but your new location still needs to support what you need.
It’s important to research your new location thoroughly, both emotionally and practically. Failing to do this can result in financial pressures you weren’t counting on, and that means money worries.
Before you move, look into these:
Access to healthcare
As you get older, the likelihood of needing more medical appointments increases and that means access to healthcare becomes much more important.
Unfortunately, some regional areas have less than ideal healthcare options. There could be long wait periods or it may mean long travel times to hospitals or to see specialists. You may even need to go to a major city and book overnight accommodation.
It’s worth speaking to locals in the area you’re considering, to find out about any potential problems before you buy. Doing your own research is a good way to prepare yourself for the cost of travel and accommodation.
Local amenities
Public transport can be touch and go in regional locations. Local shops, social clubs, and anything that supports your hobbies or interests, are other aspects to consider in your new location so you can make the most of your new lifestyle.
For example, some clubs offer courtesy buses which could be a lifesaver if you prefer not to drive at night, particularly in bad weather. Little conveniences like this can make it easier to meet people in your new area.
Seeing friends and family
For some people, this will be the biggest consideration. If you’re moving away from friends and family, here are some questions to ask yourself:
Will you be happy with that decision in the long run?
Do you have the financial means to visit them as often as you’d like?
Will they visit you… and can they afford to?
Are there easy transport links if people have to fly to see you?
It’s easy to promise to visit, but life can quickly get in the way, so try and be pragmatic. If you have grandkids and a big social circle, the financial benefits of moving away may not be worth the sacrifice of personal connections.
If you have the means, one option is to do a short-term lease in a new location before you pull the trigger and sell up. It will give you a chance to experience life as a local, before you make the financial commitment.
Know the costs of selling and moving
Your tree or sea change and the process of downsizing should result in long-term savings, but the upfront costs can still be significant.
Some of these costs will come up before you’ve sold your current home, so you’ll need to have appropriate cash flow to cover them.
They include:
agent fees and marketing costs to sell your current home
stamp duty on your new property
removalist and relocation costs
legal and conveyancing fees
minor renovations or updates to both your current home, and your new home, if needed.
Consider the impact on your pension
The eligibility criteria for your Age Pension is based on the value of your assets and the income you receive. The home you live in is not included in this assets test.
When you sell your home, if you plan to use the money from the sale to purchase a new property, it will be exempt from the assets test for up to 12 months – but it will be considered in other forms – such as if you invest the money into your superannuation.
You will need to keep Centrelink up-to-date on your plans to sell, to buy and the outcome of these. Ensure you consider this as part of your financial outcomes so you don’t get a nasty surprise once you’ve moved. If in doubt talk to a professional to help point you in the right direction.
Finding employment
If you’re not quite at retirement age or you’re planning to keep working for a few more years, don’t assume you’ll find employment easily in a new location. Smaller regional or coastal areas may have fewer jobs, and some industries or sectors may not exist.
For people working in flexible roles that can work remotely, moving to a new location poses much less of an issue. It’s worth discussing this with your employer if you could do your role 100% remotely, even if it isn’t currently part of your set-up.
Many employers have become more open to flexible options and even if you need to travel to the office from time to time, you could still find an option that suits your desired lifestyle change.
Bottom line
For some of us, moving to a new location is the key to living more with less. If your future goal for your eventual retirement is to start life on your own terms, moving now can be a great way to begin that journey.
By thinking about what you really need in a home, and your lifestyle, it may be time to unlock the equity in your current home by downsizing. You could then enjoy a more affordable and relaxed future that a regional or coastal location offers.
Remember, with the right planning, your next move could be the smartest one yet.
Go deeper:
Why looking at regional markets could help build your property portfolio
What are the possibilities and pitfalls of a reverse mortgage?
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
