What is the best financial decision – staying in the family home or downsizing to a retirement village?
It is important to understand that there is a cost to living in a village – it is not free.
At the same time living in the family home has a cost – it’s not free either.
It's best to get a piece of paper and total up the benefits and costs of each.
If you stay in the family home the three major benefits are no moving costs, capital gains, and your estate will get all the value of your home when it is finally sold.
But there are many costs – financial costs, as well as physical and emotional costs.
You will have to maintain the family home for the next 10 or 20 years which will cost you money every year. There will be small and big costs, like gardening, painting, replacing hot water systems and more.
You may need to add ramps as you age to make it safe, lifts where you have stairs, a new shower in the bathroom. None of these are cheap.
When you die your 10 year older house will need to be done up to get the best sale price.
The emotional cost of staying at home could be isolation, risk of falls in the garden and difficulty getting to the shops when you no longer drive.
How much cash and emotion is going to be consumed over these 10 or 20 years and do you have that cash and the emotional support?
Downsizing to a retirement village in most cases will deliver you a lump sum of cash to live on, to enjoy life and to pay medical bills. This is a peace of mind pay off.
There is no stamp duty moving to a village, your home is already designed for you to age safely.
Maintenance, gardens and rates are covered by your fees, transport to shops and doctors is built in. And so are your neighbours who are just like you.
With most villages you don’t share in the capital gain on the value of your home, so your estate will be behind here when you die. But as you can see you won’t have all the costs of the family home while you’re alive either.
Your piece of paper with all the costs and benefits of staying at home or in a village. It may show you that you are say $100,000 over 10 years better off staying in your family home.
Now you have to decide if 10 years alone in the family home, with all its expenses, is better than the sense of security and control that the retirement village offers you for the rest of your life.
Is it about the money or is it about ageing well?