Downsizing the Family Home

Why Consider Downsizing?

Let's get honest, by the time we reach our 60s or 70s, many of us find ourselves surrounded by a larger home than we really need. The kids have flown the nest, the garden now feels larger and overwhelming, and household maintenance is just too much.

Downsizing isn’t about giving up; it’s about choosing convenience, reducing financial burdens, and setting yourself up for a comfortable retirement.

In Australia, downsizing has become more than a lifestyle choice—it’s also a smart financial move. With recent changes like the downsizer superannuation contribution scheme, older homeowners have options to boost retirement savings while freeing up equity tied in bricks and mortar.

The Benefits at a Glance

• Save on costs: Smaller homes mean lower rates, insurance, utility and maintenance bills.
• Unlock equity: Use sale proceeds to improve financial security or fund lifestyle choices.
• Downsizer super contributions: Eligible individuals aged 55+ can contribute up to $300,000 into super (or $600,000 as a couple)
• Simplify your life: Fewer rooms to clean, fewer stairs, and easier daily living.
• Right-size your lifestyle: Smaller housing near amenities like healthcare, transport or grandchildren.

In Queensland, for example, retirement‑villages now cost nearly 50% less than standard family homes, making them a smart option for many downsizers.

Is Now the Right Time?

According to surveys, most older Australians prefer to stay in their long-time homes—only about 19% choose to move. It’s not a rush; it’s about timing what fits best for you. Common reasons people choose to downsize include:

• Physical challenges with stairs or yard upkeep.
• Lifestyle change—wanting to be closer to family or community facilities.
• Financial planning—turning property equity into income or travel funds.
• Desire for a simpler, safer, and more sustainable lifestyle.

The ideal timing is personal. It could be triggered by a health change, or simply the desire to start a new chapter.

What Are Your Downsizing Options?

Here are common moves older Australians take:

• Smaller home in the same area – maintain community ties while lowering costs.
• Move closer to family – helps with visits and support, especially in later years.
• Retirement village or independent living – low maintenance, secure, with community features and sometimes included care.
• Land lease villages – eco-friendly and budget-conscious, without deferred management fees.

The Downsizer Super Contribution

One of the most attractive incentives is the government’s downsizer contribution scheme. If you’re 55 or older and have owned your primary residence for 10+ years, you can contribute up to $300,000 per person (or $600,000 per couple) from the sale proceeds into your super without counting towards your regular contribution caps.

Here’s what you need to know:

• You must be aged 55 or older at the time of contribution.
• Your property must have been your principal residence for at least 10 years.
• Contribution must happen within 90 days of settlement (extensions possible in some cases).
• It doesn’t count towards concessional or non-concessional caps—but will count towards your transfer balance cap and affect pension assets test.

For example: if a couple sells their home for $1.2m and have $800k left after costs, they can each contribute up to $300k into their super funds—a total of $600k, boosting retirement income significantly.

Financial and Pension Considerations

While downsizing can improve your finances, it can also affect pension support and aged care contributions:

• Age Pension asset test: Home sale proceeds are exempt for up to 24 months if reinvested in another home, but then count as assessable assets.
• Super balance test: Contributions may push your balance near the $2 million threshold, affecting pension or aged care assessments.
• No double dipping: If you contribute to super, you can’t also claim part of those funds in concession caps later.

Always speak with a financial adviser or Centrelink’s Financial Information Service before making moves.

Practical Downsizing Steps

Thinking of moving? Here’s a step‑by‑step overview:

• Clarify your “why”: Are you seeking space, money, community, or simplicity?
• Set financial goals: Include sale proceeds, new housing cost, super contributions, and pension impact.
• Explore housing options: Retirement village, smaller home, land lease, or staying put.
• Timeline your move: Coordinate property sale, purchase or rental, and downsizer contribution window.
• Declutter and sort: Decide what to keep, donate, sell, or discard. Enlist a professional organiser if helpful.
• Budget moving costs: Remove, relocation, minor renovations, stamp duty (if any) — these can cost tens of thousands.
• Legal and financial checks: Speak with your solicitor and financial adviser about downsizer eligibility, CGT, and pension impact.
• Visit new communities: Attend open days, talk to residents, and imagine life there.
• Make the move: Plan logistics, transport, unpacking and settling in. Allow emotional adjustment time.

Emotional and Lifestyle Aspects

Letting go of a family home can be an emotional journey. For many, it’s filled with memories and attachments. Here’s how to handle it with grace:

• Take it slow: Downsizing doesn’t have to happen in one weekend. Spread it over months if that feels right.
• Engage loved ones: Involve family or friends in sorting sentimental items.
• Use professionals: Organisers and real estate specialists can ease the pressure.
• Think space-wise: Identify what really fits into your new life—like furniture and personal items.

The result? A home that supports your comfort, energy, and lifestyle—not drains it.

Case Study Stories

Consider Paul and Jeanette, aged 70 and 74, who sold their 40-year family home and moved into an eco‑friendly land‑lease community in Victoria. They downsized, saved on energy bills, gained access to pool and yoga facilities, and avoided deferred fees. Their story highlights how a thoughtful move can open up freedom and savings in retirement.

Or look at Queensland retirees who chose downsizing to free up family-sized homes helping younger families move in, and benefiting from the significantly lower cost of retirement units.

What the Data Tells Us

In Australia, around one-quarter of people aged over 55 have downsized—a trend that grew after the introduction of the downsizer scheme in 2018. While surveys show most seniors prefer to stay put, experts say greater incentives and planning support could unlock more downsizing and ease pressure on the housing market.

Downsizing Your Family Home the Smart Way

Downsizing is more than a move—it’s a strategic shift. It’s doing more with less. Less clutter, less responsibility, less cost—and often more freedom, security, and connection.

The downsizer super contribution is a powerful tool for older Australians, but it must be balanced with pension and financial planning. Consulting independent advisers and planning carefully can help you reap the benefits without compromising support or lifestyle.

Ultimately, downsizing is about honouring the next stage of your life, with intention, clarity, and choices that serve you.