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Staying in your home?

The “age in place” approach to retirement is growing in popularity. If you think staying in your home is right for you, we’ve got four important things to consider first.

Living independently for longer

Continuing to live in their current home for the foreseeable future is popular with the majority of older Australians. In a recent survey of 1100 people aged 55+, 55% said they’re planning to remain in their existing home throughout retirement1. With around 800,000 receiving in home care2  and a higher average age for seniors moving to an aged care facility3, it seems that “ageing in place” is becoming more common.

55% said they’re planning to remain in their existing home throughout their retirement.

Invest or move on?

When staying in your current home is a priority, it’s still worth thinking about the practical and financial side of your decision. Here are four points to help you determine whether “ageing in place” is right for you and your current home:

  1. Future-proofing your home - for your home to be comfortable and convenient as you age, you may need to renovate. Make sure you take into account any costs involved in getting your home future-ready so you can enjoy living there for longer. To give you an idea of the budget you might need, the basic cost of a kitchen renovation is expected to be $23,061, $41,800 for a standard one, or a whopping $68,961 for a deluxe new kitchen4.
  2. The value of your investment - for any home improvements, it’s important to ensure your budget is at least equivalent to the overall value you’re adding to your home. Whether the investment you’re making now will be worth it depends on a few factors, including how long you’re planning to live there and how property values are expected to perform in your local area.
  3. Maintenance - routine home maintenance could be something you’d prefer not to spend time on in your retirement years. Or doing it yourself may be more of a challenge as you grow older. In either case, you may need to include outsourcing home maintenance and repairs in your future budget. If you let things go, it could reduce the value of your home over time.
  4. Your neighbourhood - what you need from your community and local facilities could change when you retire. Your neighbourhood could also evolve and change around you too! Take a fresh look at your area, bearing in mind what it would be like to live there if you were unable to drive or needed regular support from health services. Is your community still going to be one you feel secure and welcome to live in when you’re older and possibly spending more time in your home?

Take into account any costs involved in getting your home future-ready so you can enjoy living there for longer.

Opportunity cost of staying put

Some older Australians do not have enough assets or super to provide sufficient income for their retirement so they may choose to downsize to release capital and boost their income. Keeping your current home means giving up the chance to boost your retirement income from the proceeds of sale. You could also be missing out on proposed tax incentives5 that may become available from July 2018 to people aged 65+ who downsize their homes. These extra issues are a reminder of the overall financial impact of choosing where to live in retirement and the value of seeking advice to ensure you’re making a decision that matches all your lifestyle goals.

Need help managing your money?

Getting expert advice can make a big difference to how prepared you are for retirement on your own. By discussing your lifestyle goals with a StatePlus financial planner you’ll have a much better understanding of the super and income you’ll need to make retirement a positive change in your life.

For more tips and tools, download our free Retirement guide or call us on 1800 620 305.

1 3Cs Research Backgrounder and Topline findings, 7 September 2017, page 2, Home ownership status table, “I own my own house and plan to live in my home for the duration of my retirement - 55% across all locations”
2 Australian Government Productivity Commission, Housing Decisions of Older Australians Research Paper, 1 December 2015, Key Points, “About 800 000 older Australians receive home care.”
3 Australian Government Productivity Commission, Housing Decisions of Older Australians Research Paper, 1 December 2015, Key Points, “Residential aged care is effectively transforming into an end of life care service. The age of admission is increasing (now 83 years on average), average tenure is about 2 to 3 years, and care needs are higher.”
4 Finder, “What you need to know about kitchen renovation costs”
5 ATO, Contributing the proceeds of downsizing to superannuation, “On 9 May 2017 the Government announced that from 1 July 2018, individuals aged 65 or over will be able to make a contribution to super of up to $300,000 from the proceeds of selling their home.” This is only proposed legislation, at the time of writing the article.
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Aware Super Pty Ltd ABN 11 118 202 672, AFSL 293340, the trustee of Aware Super ABN 53 226 460 365. Financial planning services are provided by our wholly owned financial planning business Aware Financial Services Australia Limited, ABN 86 003 742 756, AFSL No. 238430.

This information is of a general nature only and is not specific to your personal objectives, personal situation or needs. Before making any decisions based on this information you should consider its appropriateness to you. Every effort has been made to ensure the information is accurate. We strongly recommend that you consult a financial planner before taking action and review the relevant Product Disclosure Statement.

Past performance is not an indicator of future performance and future performance is not guaranteed.

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