Research shows Australians are waiting too long to downsize – and by putting off the decision health outcomes suffer. 

The outdated notion of retirement, where one spends their twilight years in a retirement village sipping tea and nodding off watching midday movies, is in dire need of a revamp.

After all, data indicates that we’re living longer, healthier, and more active lives compared to when retirement was first conceived over a century ago. At the time, life expectancy was just 55 for men and 58 for women.

Most homeowners aren’t even aware of a new style of community for over 55s that offers everything from craft-beer brewing to the latest in health and wellbeing trends – all without having to fork over their life savings.

These modern communities see residents forging new lifelong friendships and achieve the best physical shape of their lives. By rethinking their approach to retirement, downsizers can once again relish life on their own terms, free from the stress of maintaining a large, inefficient empty-nest home.

Australians leave retirement planning too late

The REA Retirement Quantitative Study 2022 shows the peak consideration of retirement occurs during the age of 55 to 64, but demand to stay in a current home increases as people get older. 

“Those aged 55+ make up almost a half of the property owner market, but they make up less than 30% of the sellers’ market,” Fiona Wong, REA’s market insights and research manager, said. 

“In terms of property types, most buyers aged 55+ are looking for a free-standing house (67%), followed by townhouse/terrace (28%) and apartments (28%).” 

Around 14% of respondents wanted to buy an acreage or rural property, 7% flirted with building a new home and just 5% were considering purchasing a home in a retirement village, the REA data shows. 

“For a lot of our customers, it can be overwhelming for them thinking about whether now is the right time to downsize,” says Von Slater, executive general manager development, sales and marketing at Ingenia Lifestyle.

“It can feel daunting to make the decision to actively put oneself first,” she says. 

“And there has traditionally been a tendency for older Australians to wait for a forced trigger, like a medical event or the death of a spouse, before they consider downsizing.” 

However, moving into retirement when it’s not on your own terms is not ideal.

Boomers’ fear, outdated idea of retirement impacting health

It’s clear Aussies need to adopt a more strategic approach to envisioning their post-work lives, considering not just how they want to spend their time but also prioritising their own overall health and wellbeing.

We’re constantly being told by the medical world about the importance of staying connected to life passions, maintaining an active social life, and prioritising fitness in order to live longer healthier lives.

However, current data indicates that individuals who should prioritize their own well-being are instead remaining in outdated homes that are too large for their needs. Devastatingly, this can potentially lead to social isolation and an increased likelihood of sickness and injury.

Staying in an older, larger family home that lacks modern standards of heating, cooling, ventilation and mobility increase the likelihood of falls and more frequent illness as we age, according to realestate.com.au research data.

Data from Habitat from Humanity specifically points out that poor quality housing has negative impacts on health and wellbeing.

According to analysis conducted by Sustainability Victoria, unrenovated pre-1990 houses had an average energy efficiency rating of 1.57 stars, whereas unrenovated post-1990 houses averaged 3.14 stars.

New homes, by comparison, are required to achieve a seven-star energy efficiency rating – not just making them more comfortable but improving health outcomes for those that live in them.

Furthermore, in many cases, it’s not just the quality of the houses that can contribute to poor outcomes; the locations of these homes, often in standard suburbs with a mix of residents, can also reduce the likelihood of regular social interaction. This lack of social interaction can lead to loneliness, which is recognized by the government as having a negative impact on health.

What holds boomers back from putting their health and wellbeing first?

It’s understandable that many older Australians face mental and emotional hurdles when considering downsizing from a home they’ve cherished for years. Financial considerations and a desire to remain in the same neighborhood are significant factors influencing this decision.

Additionally, factors such as soaring house prices, increasing cost of living pressures, and adult children living at home longer as housing affordability diminishes further complicate the downsizing decision.

It’s no surprise that for many baby boomers, especially those whose nests are not yet empty, downsizing remains a lower priority.

Statistically, embracing the positive step of downsizing can lead to significantly improved health outcomes over the long term. Picture: Eugene Hyland

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What’s the future of retirement in Australia?

Downsizing, or ‘rightsizing,’ is viewed as one of the solutions to housing affordability and supply issues in Australia, as it releases larger homes for the next generation of families.

This approach signifies a more optimistic and life-affirming stance on retirement, debunking the perception that retirement is exclusively for ‘old people’. After all, as the saying goes, age is just a number, and one is only as old as they feel.

Downsizing and rightsizing involve prioritising what you want from life, rather than being burdened by outdated ideas that no longer serve their purpose. If the family home no longer brings joy, it might be time to let go and transition into a more positive living situation.

What’s also clear is that buyers need to act decisively and strategically rather than delaying the decision until it’s too late due to a negative health event, which is unfortunately the most common reason for moving into aged care.

Fortunately, Ms. Slater noted that it’s becoming a trend among some older Australians to make retirement and downsizing decisions while they’re still fit and healthy.

“At Ingenia, we are certainly seeing that more and more people are feeling empowered to make decisions about their retirement while they can,” she said. 

“Quite a few boomers have recently put their own parents in to care and it hasn’t been their choice. That’s hard to reconcile and they don’t want that to happen to them so we are probably seeing a little bit of a shift in attitude where the boomers want it to be their choice.” 

Costs to downsize are lower than traditional purchase methods

In recent years, legislative changes have been made to address some of the financial barriers to downsizing. 

The Incentivising Pensioners to Downsize Act 2022 means the proceeds from the sale of a home are now exempt from an age pension asset test for two years, rather than 12 months, allowing retirees more time to purchase, build or renovate a new principal home without impacting their payment rate. 

The Federal Government has also allowed people over the age of 55 to make a one-off $300,000 contribution to their superannuation when they sell their principal home. 

Furthermore, there are different ways of purchasing property that many buyers will be unaware of – such as land leasing – that are ideally suited for those considering downsizing.

Land leasing is where buyers purchase a home in a designated community, but lease the land it sits on, drastically reducing traditional transactional costs and helping them get into a new home quickly and easily.

Additionally, there are no strata fees or stamp duty to pay – council rates and all ongoing maintenance of community facilities is covered as part of the weekly fees.

Land lease communities, like Ingenia in Victoria, New South Wales and Queensland, are becoming a popular retirement option for over 55s. 

Under the plan, people buy a new or existing home within a community and pay a weekly or fortnightly fee to lease the land rather than own it. 

The communities are built in popular locations as secure, residential neighbourhoods with shared facilities like clubhouses and recreational areas.  

“We have 4500 homes in over 55s communities and we’ve got another 5900 to develop because there’s a tsunami of baby boomers coming and a lot of them haven’t yet decided to downsize or right size into these communities,” she said. 

“We provide independent free-standing homes, gated with amazing community facilities from swimming pools, saunas, billiards rooms, cinemas – all the amenities that bring community spirit.” 

Community lifestyle as unique as you

In contrast to the outdated ideas of retirement some people have, those that have made the decision to downsize rarely look back – except to say they wish they’d done it sooner.

Ms Slater said Ingenia communities made sense for people who wanted to feel a sense of belonging and camaraderie, and live in a similar neighbourly environment to their home.

Ingenia Lifestyle’s executive general manager of residential communities Justin Blumfield said overwhelmingly, Ingenia communities offered connection and quality of life. 

“Often when I chat with our residents , they don’t talk about the house or the facilities, they talk about the friends they’ve met that are like-minded and the same age,” Mr Blumfield said. 

Downsizing is all about reclaiming time for the things that bring you joy. Picture: Eugene Hyland

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“Remember, they may have previously been living in a community where all their neighbours were an eclectic mix of people and now they’re coming into over-55s community living with people at a similar stage of their lives. That connection, I think, is one of the number one benefits of moving to this sector as early as they can. 

“I go into the clubhouses and there are art classes underway, games of bowls going on. They really are vibrant places and we do all we can to foster that. It’s all about supporting our residents to be happier and healthier in their retirement.” 

It’s clear that modern downsizing is vastly different from the old-fashioned concept of old-age homes. It’s about living a full, independent life with supportive neighbours and enjoying each day with happiness, purpose, and friendship.

Downsizing with joy is about making the most out of life.