What you need to do - and not do - before downsizing

Thinking of saying goodbye to the big family home now that your kids have grown up and moved out? This downsizing checklist has you covered.

There are many reasons why you may be considering downsizing from your current home.

Wanting a more manageable property; being closer to family; unlocking cash to fund retirement, travel or a lifestyle change; reducing exposure to natural disasters; a fresh start with a new partner... these are just some of the many factors that drive this decision.

Nevertheless, there are some common dos and don'ts to consider in order to achieve your desired outcomes and safeguard your financial independence.

Downsizing do's

Ensure your downsizing experience is smooth and positive by:

1. Starting early and planning meticulously

The more prepared you are, the better.

This will help you determine the best time to sell, the sale price you can reasonably expect to achieve, and what you will ultimately walk away with.

2. Making the most of the opportunity to declutter

You can make some extra cash by selling items using online apps, through local auctions or by holding a garage sale.

Plus, you'll lower your moving costs and have less to clean in your new home!

3. Researching the property market

Research thoroughly and choose a location that suits your lifestyle and needs.

Downsizing shouldn't just be about occupying a smaller home but also reducing your housing costs, especially in retirement.

4. Explore different retirement living options

Choose one that aligns with your preferences and care needs - both now and in the future.

5. Understanding the expenses involved

Be across all associated expenses including selling costs, stamp duty, and moving expenses.

This allows you to budget accordingly and avoid nasty surprises that could eat into your savings or blow out your credit card.

6. Consider a downsizer contribution

Look at whether you are eligible to use the downsizer superannuation contribution and if it is in your best interests to do so.

This can be a lucrative means of boosting your super, but can only be used once.

7. Prepare to get emotional

Prepare for the emotional and practical adjustments of moving to a smaller home.

Focus on the positive aspects of downsizing, such as a simpler lifestyle, reduced financial burden, and new opportunities.

But also acknowledge the anxiety and sadness of leaving your old life behind, as well as the stress that such a move can have on your relationships.

Downsizing don'ts

Conversely, there are certain things to avoid like the plague if you're looking to dodge a downsizing disaster. Don't:

1. Rush

Take your time to make informed decisions and arrive at the best outcome for you and your family. Many people race to escape the city for a quieter life, only to feel socially isolated or cut-off from healthcare and other services.

2. Downsize for the wrong reasons

For instance, selling up to give money to your adult children is generous, but could leave you financially exposed - especially later in life (remember that women typically have less in super than men, making equity in the family home an even more precious retirement asset).

3. Be pressured into it

Spousal pressure and elder abuse may force your hand or cloud your judgement. We are talking about your home and your life, so you have to be comfortable with any decision to downsize and where you move to next.

4. Avoid professional advice

Make friends with your financial advisor, accountant and legal professional as well as relevant real estate agents (buyer's agents can be particularly useful to help you find the right property and negotiate a good price on your behalf). These qualified professionals can offer you independent advice and guidance towards achieving your desired outcomes.

5. Overlook the tax and pension implications of downsizing

These could positively or negatively impact your financial position by tens of thousands of dollars - no small amount! Again, this is where professional advice can be worth its weight in gold.

The decision to downsize is deeply personal and one that will depend on your unique circumstances, needs and aspirations for the future. Armed with these dos and don'ts, you are now much better placed to make the right decision for you and ensure it works to your advantage. Good luck!

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