Financial planning for downsizers: a smooth move to the Southern Highlands

Moving to the southern highlands

Whether you want to get closer to nature, explore national parks, or chow down in great local cafés and boutique wineries, it’s easy to see why so many people downsize to the Southern highlands. Nestled in the breathtaking outdoors of the Great Dividing Range, the Highlands is still conveniently connected to Wollongong, Sydney, and Canberra by a 60-90 minute drive.

While downsizing is often a lifestyle decision for pre-retirees and retirees, it’s also a big financial decision. If you are considering making the transition, these tips will help you plan financially for a smooth move to the beautiful Southern Highlands.


What are the key financial benefits of downsizing?

Downsizing will free up cash flow that was previously tied down in your home. How you allocate these funds can greatly impact your finances in retirement, so it’s important to consider your options with a financial advisor such as Poole Advisory. You may choose to:

  • Pay off your mortgage or existing debt. If you haven’t already, downsizing presents a golden opportunity to pay off your mortgage or other debt. Both are smart options given interest rates hit a 12-year high in 2023 and many experts tip them to continue rising.
  • Re-invest the money. You may want to re-invest in property, boost your superannuation or SMSF, set up an investment bond, or look to defensive assets such as government bonds, term deposits or high-interest savings accounts.
  • Spend the money (or some of it). When will you enjoy the fruits of your labour, if not during retirement? You could travel, take up a new hobby, or simply enjoy eating out more. We’re located in Bowral, so we can personally vouch for the delicious food and wine the Southern Highlands have to offer!


As well as wealth creation opportunities, downsizing should save you money through:

  • Lower insurance costs. Home insurance premiums have soared by a whopping 28% in the past year. A smaller home with fewer valuables means you could easily save several hundred dollars annually on a more affordable insurance premium. 
  • Lower utility bills. Energy prices in NSW also rose by up to 25% in 2023. Heating and cooling a smaller house is far more economical, with the savings again likely to be a few hundred dollars a year. 
  • Fewer home maintenance costs. Downsizing could mean fewer upkeep costs such as gardening or cleaning – especially if you currently pay a cleaner or landscape gardener you’ll no longer need.


Financial planning and budgeting tips to keep in mind

As you approach retirement age and farewell your primary source of income, it’s critical to plan your budget carefully when downsizing. That means accounting for costs such as:

  • Transfer duty (formerly known as stamp duty). This will be one of the highest costs involved. The exact amount will depend on the value of your new home (there may also be some concessions for an ‘off the plan’ purchase). To give you an idea, the current transfer duty for an established NSW home worth $1,000,000 would cost around $40,000.

  • Renovations. Whether you want to spice up your existing home for maximum sale value, or your new place needs a little tender loving care, renovations can also be one of the higher costs associated with downsizing.

  • Moving costs. Even if you have your family and friends helping out, moving costs money. Hiring professional movers or trucks, transportation, and temporary storage can all add up to several thousand dollars. The greater the distance you move, the more you’ll pay.

  • Real estate agent fees. The average real estate agent commission in NSW is 2.1%, however, when selling your home you may need to pay additional marketing fees to attract more qualified buyers.

  • Potential impact on the Age Pension. The proceeds from selling your home are exempt from the Age Pension assets test for up to 24 months – as long as you plan to use them to buy, build or renovate another home. After that, any money made from the difference between the sale of your existing home and the purchase of your new home impacts the assets test. This may reduce your pension income if you are receiving any.


Legal considerations for downsizers

There are several legal factors to take into account when downsizing, including recent legislation changes that may make the move even more attractive to pre-retirees:

  • Contracts and conveyancing. Downsizing often means a displacement transition period between homes, either in a hotel or with family and friends. Hiring legal professionals such as solicitors or conveyancers guarantees your sale contracts go through smoothly, so you can avoid lengthy delays or overstaying your welcome!
  • Estate planning. You’ll need to update your Will to reflect the changes in your home and assets. While you’re at it, it could be a good opportunity to review your beneficiaries or any power of attorney arrangements you have in place and ensure they are still appropriate.
  • Downsizer Superannuation Contribution Program. If you are aged 55+, you can now contribute $300,000 (or $600,000 for a couple) to your superannuation account from the proceeds of your home sale. Prior to 1 January 2023, the minimum age to qualify for the program was 60.


Ready to plan for the next chapter?

We recommend you speak with an experienced financial planner before you start shopping around for your new home. At Poole Advisory, we can help you create a sound financial plan to make downsizing a smooth experience – whether you need advice on your new home budget, or how to invest new cash flow efficiently.

Given we are based in Bowral in the Southern Highlands, it makes us the perfect financial advisor if you’re looking to move to the area. To get started, you can book a complimentary introductory consultation with our Principal Financial Advisor Anthony Poole, or send us a message with any questions via our contact form.


Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917

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