The unexpected joy of downsizing
When you’re a company that has helped tens of thousands of Australians downsize in retirement, you get to speak to a lot of people; and well… you start to notice similarities.
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Sencia is part of the Knowles Group who have been developing retirement options since the 1970s. In that time, the countless conversations we’ve had with people has delivered a wealth of insights into what Australians expect from retirement.
Downsizing, of course, typically means selling the larger family home; then using the funds to buy a smaller, less expensive residence. Wait a minute… sell the family home? That would have to be a bad thing, right?
But unexpectedly, when people downsize, the comment most frequently made is: “Why didn’t we do this sooner?” This feeling can be attributed to the sheer sense of unburdening that downsizing can bring. It’s a surprising phenomenon; in spite of the anticipated feelings of dread, moving on to a new chapter instead brings waves of relief.
Getting Your Downsizing Ducks In A Row
All but the most ardent critics of the late Kerry Packer found his logic hard to disagree with: “If anybody in this country doesn’t minimise their tax, they want their heads read.” And a professionally managed superannuation strategy is one, perfectly legal way of minimising tax.
Whether you’re approaching retirement age, or have already started tapping-in to your superannuation as a retiree, there are a number of ways to better manage your super fund to your advantage. We’re talking about a large chunk of change here, so getting your super sorted is a very smart move.
The government offers all kinds of incentives to encourage people to save money into their super fund; and they do it for all kinds of reasons. One reason worth considering is what you might call ‘a super-lead solution’ to the housing supply shortage.
With their Downsizer Contribution scheme, the Australian government wants to get more built homes on the market; and are encouraging people 55 and over to sell their family homes. The enticement is allowing sellers to use some of the proceeds of the sale to top up their super funds, and thereby capture a potential tax-exempt source of income in retirement.
Timing is always critical, which is why planning before you sell is very important. Having said that, you have up to 90 days after settling to move proceeds of a home sale into your super fund; so even if you’ve just sold, you still can take advantage of the scheme. Though you will have to get your skates on.
Consulting a trustworthy, independent financial adviser is always well worth the effort. The Downsizer Contribution Scheme has conditions which, depending on your personal situation, will need to be taken into account.
Useful Information:
https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Downsizer-contributions-for-individuals/
https://moneysmart.gov.au/financial-advice/working-with-a-financial-adviser
The good news, and the even better news
Firstly, if you are contemplating downsizing anyway, then the Downsizer Contribution scheme could be a very clever way to make better use of up to $600,000 of income generated by the sale of you and your partner’s home.
Secondly, making the downsizing move to a new retirement community like Green Ridge Hunter Valley makes the Downsizer Contribution scheme work to its full advantage; as newly built residences are fully exempt from stamp duty; which is big money going to you, not to the government’s coffers. If that’s not enough of an incentive, day-to-day living at Green Ridge saves even more money, with lower insurance premiums, lower council rates, and lower energy bills; meaning you will have even more funds at your disposal to make retired life so much more comfortable. Kerry Packer would very definitely approve.
Seeing the full picture
Many people we speak to tell us of the liberating feeling of finally being able to pay out their mortgage. Even when a small amount of debt remains owing, the feeling of going free-and-clear is noticeably lighter.
Of course, releasing the equity tied up in your old family home brings more than just financial benefits. Downsizing to a brand new villa at Green Ridge means you’re no longer wasting time on the costly, never-ending home maintenance treadmill.
No maintenance commitments gives you all the resources you need to focus on the things that matter: being with loved ones; meeting new friends; finally getting on top your health and fitness; and of course, more time to travel the country or the world, knowing that when you return, your home will be neat, tidy and just the way you left it.
All of this is why downsizing the ultimate lifestyle upgrade.
It starts with a conversation
While Sencia are not financial advisers, we do talk to people just like you, every day. Whether you have one question, or lots of questions, we most likely have the answers you need.
There is another thing we definitely are not; and that’s high-pressure salespeople, so that’s a good feeling right there!
