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Turning your family home into your retirement home

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By Capital Partners Lifestyle

Your family home is one of your most important assets in terms of its financial and personal value. It takes on a new significance when you are ready to retire. This piece of property is a key part of your financial plan, whether it is intended to be a place where you can live securely for the rest of your life or it is the investment to fund your retirement.

Yet Barry LaValley (vale), author of So You Think You Are Ready To Retire says that many Australians have a strong emotional investment in their family home, making it difficult to consider rationally how the home fits into your retirement plan. So how do you assess the role of your family home in your retirement plan?

How much equity do you have?

The amount of equity in your home is a key factor in deciding whether you will live in this home or elsewhere. If your home is fully paid off and too large for your current needs, you may prefer to downsize and use some of that extra capital to fund your future. However, if you have plenty of equity and another income stream, you could choose to remain comfortably in your home.

If you don’t have much equity, this could be a good time to simplify your financial situation by downsizing to a home that you can pay off, so you are not concerned about mortgage payments as you grow older.

How much maintenance does your home need?

When your kids are young, a huge backyard and a swimming pool can seem like worthwhile investments of your time and your money. However, as they grow up and move into their own homes, you are still monitoring the pool water and mowing the lawn every weekend. Even if you quite enjoy maintaining your home right now, ask yourself how you will feel about all these self-imposed chores a decade from now or if you were to be living in the house alone rather than with your partner.

If you are already tired of home maintenance, you could consider moving into an apartment, where the body corporate takes care of all the maintenance issues for you.

Also, look around your home and ask yourself how you will navigate your home later in life if you become physically impaired – for example, you may not mind going downstairs to the laundry now, but this could be a serious inconvenience later. When you look around your home from the perspective of needing a walking frame, you will see it very differently.

While you may not be ready to consider moving into a retirement home where the layout is specifically structured to ensure safety and convenience, you should acknowledge that there may come a time in the future when your current home is too hazardous.

Does the location still suit you?

As you grow older, you might gradually feel less compatible with your neighbourhood. The weather might not suit you, the shops and other facilities might not seem so convenient and the friendly neighbours you’ve known for years might be moving on. Even if you are still happy with your current location, it is important to ask yourself how you would manage if you could no longer drive to the shops.

Another consideration is your proximity to close friends and family – can you comfortably visit the people who matter most to you? Or would life be more convenient in another location?

While your family home might seem perfectly suitable when you are newly retired, you need to consider how your perspective will shift as you grow older. Moving from your home is an emotive issue, so it is important to think seriously about what circumstances you would need to move so you can prepare yourself for the eventuality.

If this article has you thinking about your retirement plan, do not hesitate to reach out to your advice team for guidance.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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