Many people overestimate how much they will have left over after downsizing, but smaller doesn’t necessarily mean cheaper.
. A friend told me she struggled to clear her belongings before moving day and took too much furniture to the new place. How far in advance should one plan this, and what are some of the financial aspects to consider? Dee: Financial planner Suzanne Haddan, the managing director of BFG Financial Services, says there are four common mistakes made by older Australians downsizing.
Third is being overly optimistic on the sale price of the current home if buying before selling, and assuming property markets only go up, and then having no contingency plan should the price not be achieved.Fourth is not understanding the effect of downsizing on the age pension. “The impacts vary, but it is the asset test that can be the big surprise as for every $1000 you exceed the asset test threshold, your pension payment reduces by $3 per fortnight,” Haddan explains.
While for many downsizing is a positive move, it is common to experience feelings of resistance, confusion, anxiety, stress or being overwhelmed, Krekeler says.What is your lifestyle, and how does your current home support it? Then look at how moving to a new home can improve on this as a way of working out what you need to look for.
What furniture, appliances and devices do you use every day? That way, Krekeler says, you can work out what you haven’t used for some time, as well as which of the much-used pieces will fit into the new home.
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