I am always fascinated by people’s reactions when I speak with them about retirement communities. Most people are pretty open-minded about living in a retirement community, although some people completely dismiss the idea, as they think it means finally admitting that you are getting old!
However for many of us, as our working life winds down and the kids leave home, one very important question that must be answered is whether to stay in your existing house, or downsize to a smaller house or even a retirement community. This is not a simple decision and the answer varies depending on your own personal situation.
So lets work through some of the questions…
Should I stay in my existing home?
Financially, you are almost always better off staying in your existing home.Buying and selling property incurs significant costs such as Stamp Duty, moving costs and agents commissions, which can take many years of capital growth to off-set. Even if your yard is too large and you need to get Jim’s Mowing in to do the gardens once a month, or a cleaner to help you with vacuuming your house, it can still be worth staying put. I think the only time you should consider moving is if:
- You are alone and/or lonely;
- You fear for your safety, or have security concerns about your house or neighbourhood;
- You do not drive and/or do not have a car;
- You are bored;
- You have an older property and it is likely that you are going to have to spend some major $$ in the near future on items like roofing, flooring, plumbing or wiring; or finally
- Your property presents access issues – it is multi-storey, situated on a steep slope or has too many steps.
(Note here that I have not recommended that you downsize to unlock the equity in your house. Most banks offer arrangements now where you can use the equity locked up in your house while staying as a resident and owner in the house)
Some of the benefits of staying in your existing house include:
- Moving incurs transaction fees (stamp duty, agents commissions, etc);
- You avoid the stress of moving;
- You don’t have to leave a familiar family home with all of those memories; and finally
- You don’t have to move away from your established community and support networks.
The disadvantages of staying include:
- It is likely that your home is too large for your current needs;
- You are restricted in your ability to access the equity in your property.
- More maintenance.
- You miss the opportunity for a fresh start in a better location, probably with a brand new home.
So if you think that moving out is the right move for you, then its time to move on to the next question!
Should I move into a retirement community or just a smaller house?
Let me make one point clear up front – a retirement community is about lifestyle. If you are bored, lonely or alone, or fear for your safety, then I recommend you consider a retirement community because it will enrich your life from just about every perspective. However if you already enjoy a busy retirement with a big social network and lots of activity, then you could address all of your concerns simply by moving to a newer, smaller, more secure and better-located home. You would also want to be in good health, or have access to an emergency alarm pendant so that you won’t have a fall and end up prostrate on your floor for three days until someone finds you.
The benefits of moving into a retirement community as opposed to a normal residential property are as follows:
- You get to live in a community of similarly aged and like-minded residents;
- You occupy a home specifically built for easy access and low maintenance;
- You have on-site management and in some cases, meals and medical care;
- You are able to enjoy facilities such as a gym, pool, club house and village bus, without having to worry about the cleaning or maintenance of these areas;
- Resident restrictions such as minimum entry ages and no pets mean less stressful living;
- You get an instant social life and network of friends; and finally
- The complex will provide you with better security and support than what you would find in a standard suburban house or apartment.
The disadvantages of living in a retirement community include:
- Typically a more expensive living option – higher costs to buy, occupy and sell;
- Smaller properties, with little or no backyard;
- Lack of choice of locations, as well as the type of house;
- Higher density living, which can sometimes feel cramped;
- Typically there is a no pets allowed policy;
- There is a lack of multicultural residents, with little age variation; and
- Generally poor financial outcomes for residents upon exit.
Many people are still fixed to the negative view that retirement communities are places where old people sit around drinking cups of tea and waiting for the inevitable. However, nothing could be further from the truth – retirement villages now are vibrant communities of active people who love getting the most out of life in retirement.
As a final word, I would encourage you to make the move to a retirement community as soon as possible. Don’t wait for the move to be “forced” on you by family and make sure you are still mobile enough to enjoy the community life.
I hope that by listing these questions and outlining the Pro’s and Con’s here you are better equipped to answer these questions for yourself. What do you think? Are you better off staying in your own home or downsizing to a smaller house or a retirement community?
Richard Andrews is the founder and director of Find My Retirement Home, a company that acts as an independent advisor and buyer’s agent for retirees looking to purchase a retirement home.