Downsizing now not a definite for seniors
The aim of this research was to explore the priorities and concerns of retirees and pre-retirees when choosing the homes and communities they hope to live in during retirement, and it found that as people approach the age of 61, they feel increasingly free to choose where they most want to live, without any constraints related to work or family responsibilities.
Also, those who have already retired by this age are more than twice as likely to say they are free to choose where they want to live when compared to pre-retirees (67% compared to 30%).
The study, entitled Home in Retirement: More Freedom, New Choices, also found that 64% of retirees are likely to move at least once during retirement, with 37% of respondents having already moved and 27% anticipating doing so – often to a new part of the country as well as to a new home, with the aim of “downshifting” to a slower paced life in a peaceful environment.
The top motivations for retirees to move include being closer to family (29%), reducing home expenses (26%), and changes in health (17%) or marital status (12%).
However, although the common assumption is that retirees will also always downsize when they move, the study revealed that almost half (49%) of the retirees who had already moved had not downsized at all – and that 30% had in fact moved into larger homes.
Their top reasons for upsizing in this way were to have a home large enough to accommodate family members on extended visits (33%) or one that would comfortably accommodate a multigenerational living arrangement. One out of six (16%) said they had at least one “boomerang” child who had moved back in with them.
Meanwhile among those retirees who did downsize, the main reasons for doing so were greater freedom from the financial (64%) and maintenance (44%) burdens of a larger home.
Commenting on these results, David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch, said that with increasing longevity and greater freedom, it was not surprising that so many retirees were striving to make their homes even more fulfilling – but noted that that achieving your dream home in retirement required careful forethought and preparation.”
Indeed, says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s leading mortgage origination group, whether retirees intend moving or staying put, and downsizing or upsizing, they need to carefully consider the expenses associated with their current goals and future priorities, including potential challenges during later years.
“This is why we always advocate that homeowners do their best to pay off their home loans as soon as possible and free up funds for the future, whatever that may hold for them.”
The surest and easiest way to achieve this goal, he says, is to start paying a more than the minimum monthly bond instalment as soon possible. This will ensure that bond is paid off in far fewer than 20 years and deliver a surprisingly large saving in interest charges over the life of the bond. “What is more, it may enable you to supplement your retirement savings for five or even 10 years by the amount that you would otherwise have been paying off your home loan.”