Planning for retirement living? Here’s what matters most

Downsizing is more than just moving into a smaller home – it’s about moving to a home that suits you and the next chapter in your life. Whether it’s freeing up money, time or making a move that suits your future care needs, downsizing can bring substantial benefits. It’s also a decision packed with emotional, practical and financial complexities.

Let’s explore the real reasons people move to a retirement village, the common barriers and regrets, and the key considerations for choosing a community that truly feels like home.

1. Why do people downsize?

The two biggest motivators are:

• Freeing up money
• Freeing up time

Often, these goals go hand-in-hand. Moving to a smaller, more manageable home reduces maintenance costs, utility bills and general upkeep expenses. Many find that their current home has become too large – full of unused rooms and storage space for adult children’s long-forgotten belongings.

People also want to stop paying for gardening, cleaning gutters and maintaining pools that are rarely used. It becomes a matter of evaluating what you truly use and enjoy in your home and whether the effort and expense are still worth it.

2. Retirement living vs aged care: know the difference

A common misconception is that retirement villages are just “nicer nursing homes”. They’re not.

Retirement villages are designed for independent living, often with future care in mind. Many now include care infrastructure discreetly built in, such as spacious kitchens, reinforced walls for future grab rails and emergency call systems, without making you feel like you’re in care.

This allows people to age in place, avoiding unnecessary moves to aged care facilities unless absolutely required. More than 80% of people receiving aged care do so at home, and for many, that “home” is in a retirement village.

3. The financial upside (and downside)

When considering a move to a retirement village, I always advise people to start with the fundamentals: review the contract thoroughly and make sure you understand the financial implications. As someone with a background in finance, I cannot overstate the importance of crunching the numbers—even if it feels tedious, it’s essential.

I also recommend visiting a financial advisor who specialises in retirement living. This will ensure that you get the best outcome for your situation.

When considering the financials of a move into retirement living, I recommend a simple three-part breakdown:

• Ingoing
• Ongoing
• Outgoing

This gives you the full picture of costs at entry, during your stay and when you leave. Comparing based on purchase price alone (for example $700,000 versus $800,00) is simple but misleading as you are ignoring two thrids of the transaction. By considering the inoing cost together with the ongoing costs (like general service charges), and the outgoing (exit fees) you will understand the true costs.

While downsizing can free up capital, it’s also vital to understand other financial implications and benefits. These could include:

• Superannuation incentives: The government’s downsizer super contribution allows people over 55 to contribute up to $300,000 per person ($600,000 per couple) from the sale of their home to super, even if they’ve hit their contribution caps or don’t meet work tests.
• Impact on the age pension: Downsizing might reduce your pension depending on how much equity you release. I like to compare pension means testing to a Rottweiler (asset test) and a Chihuahua (income test) – the asset test often bites harder. So, for example, a pensioner may think it’s best to purchase the cheapest apartment in a retirement village, but actually the more expensive one can be of greater benefit. That’s because for every $100,000 you go over the asset threshold your pension reduces by $7800 a year, if that money is in your home you can getthe benefits of an increase to your pension and a nicer home.

5. The emotional and practical hurdles

There are two main barriers to downsizing to a retirement village:

1. “What am I going to do with all my stuff?” Years of accumulated furniture, keepsakes, tools and memorabilia make it hard to let go. It’s a significant emotional hurdle.

2. Financial confusion Even seasoned property owners find retirement village contracts and costs confusing. This isn’t like any real estate transaction they’ve encountered before, making people hesitant and fearful of making a mistake.

When thinking about the financial implications of downsizing, it can be easier to put it on the backburner for another day. To overcome this, seek professional advice from financial and legal specialists in retirement living who have done this many times over. You should also visit a number of villages to see how the benefits of downsizing can be worth the effort.

5. The benefits of living in a retirement village

If there’s one universal regret I hear from downsizers, it’s this: “I wish I’d done it sooner.”

Once people move into retirement living, their newlifestyle with reduced stress and increased social connection often lead to unexpected benefits, including better health. I’ve witnessed this firsthand with my grandmother. After moving into a retirement village, her social life boomed and her health improved to the point where she successfully underwent open-heart surgery at age 82, something doctors said wouldn’t have been possible before.

What often surprises people is that the greatest indicator of long-term happinessin a retirement community has little to do with the financies. Instead, it comes down to how you spend your time, who you spend it with and the activities and connections that fill your days.

That’s why I often say it’s about more than the contract or the costs – it’s also about the vibe. Ultimately, you need to find a community where you feel a genuine sense of belonging.

7. Finding the right community (it’s all about the vibe)

Don’t fall into the trap of choosing a village based solely on proximity to your current home or family. While convenience matters, the right vibe matters more. You’re choosing a lifestyle, not just a location.

As I’ve mentioned, the key to a successful retirement village move isn’t just the contract or the cost. It’s about belonging.

I always advise that people trying to find a village should:

• Get a copy of the social calendar.
• Circle the activities you’d want to participate in. Are there many? Are there few?
• Ask to attend a class or event.
• Visit during open days or happy hours and chat with the residents.

By taking part you’ll get a better sense of what it’s like to live there and what it’s like to be part of that community. The people you spend time with and the experiences you share are key influences on your happinessand enjoyment of village life .

Please remember

Downsizing isn’t just a property decision, it’s a lifestyle decision.

Done right, it can be transformative. But you need to:

• Crunch the numbers.
• Understand the contract.
• Choose a community that aligns with your lifestyle.
• Think not just one, but two steps ahead. You might not need care now, but what lies ahead?

And above all, don’t let uncertainty delay what could be the best move of your life, ask questions and seek advice.

Considering downsizing or exploring retirement living options? Make sure you’re informed, and don’t go it alone, expert advice tailored to retirement living can make all the difference.

See Rachel Lane explain more about retirement living here.