How to decide where to live in retirement

Posted by Pacesetter Financial Services

When you retire you begin a phase of life that brings significant changes, and if you’re financially prepared, it can be a really interesting and satisfying time of life. Your options in retirement will largely come down to what’s affordable once you’re no longer earning. So seeking financial advice as you approach retirement can be invaluable in helping you to set and work towards achieving goals. Among your retirement planning priorities will be where to live. Here are three key tips you should consider, and that we can help you to fully explore to enjoy your retirement of choice.

1. Your alternative income

Your income in retirement is likely to come from more than one source – super assets, investment assets, part-time employment, the age pension, the release of home equity or selling the family home. The factors involved in planning how to fund your retirement are highly complex and depend on individual circumstances. They may involve transition-to-retirement (TTR) plans, tax efficiencies and your estate planning provisions. Rather than leave decisions about your post-retirement income until your retirement is imminent, consider taking advice now that will allow you to implement strategies for achieving outcomes when you do retire.  As your financial planner, we’re not only qualified to deliver advice, our experience allows us to provide you with insights around your probable needs in the next important stage of your life.

2. ‘Age in place’, downsize or upsize

Increasing numbers of Australians are preferring to ‘age in place’, in other words, to stay in the family home. The benefits are obvious – a safe and familiar environment in a community you know and enjoy. However, you’ll need to think carefully about whether this option is financially viable for you. Another question is whether the home’s size and layout will continue to be manageable as you age.
Many retirees choose to downsize at retirement, an option that needs to be a considered financial decision, especially if you are hoping to liquidate the cash that has been tied up in the family home, which may not be as straightforward as you think.

In many families, grandparents are taking on increasing roles in terms of providing financial and other types of support for their children and grandchildren. With this in mind, some couples may want to upsize at retirement to make it easy for family members to stay. This decision too may have major financial implications we will be able to spell out for you. A more practical question regarding upsizing is whether the maintenance involved in owning a larger property is going to suit your retirement lifestyle.

3. Looking ahead

As we age, living within easy reach of family, friends, leisure activities and healthcare is likely to become increasingly important, but could prove too expensive unless it is included in your whole-of-life financial plan.

Changes in life expectancy mean that you are likely to live significantly longer than your grandparents did.  In 2054–55, life expectancy at birth is projected to be 95.1 years for men and 96.6 years for women, compared with 91.5 and 93.6 years today (Note 1). Not surprisingly perhaps, the number of aged care places is rising too. According to reports by the Australian Institute of Health and Welfare (AIHW), the number of residential aged care places grew to 185,482 at 30 June 2011, an increase of 2,632 (1.4%) since the previous year (Note 2).

More and more possibilities exist for aged care accommodation, from retirement villages to serviced apartments, home care and residential aged care that offers various levels of support. Operators offer a range of contract types, including freehold title, lease or licence, company title or rental agreement. You should consult your financial adviser before making any decision to ensure you fully understand the costs and structure of any agreement you are considering.

With a sound financial plan in place and an adviser alongside you who has a ‘helicopter’ view of your overall financial situation, you are likely to be well-placed to make sound decisions regarding one of the greatest issues of your retirement years and beyond: where to live.

Note 1. Source: Australian Government 2015 Intergenerational Report

Note 2. Source: Australian Institute of Health and Welfare (AIHW)


Pacesetter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

This information (including taxation) is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Pacesetter Financial Services strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.

Please contact Pacesetter to find out more about how our financial planning services can help with this important decision, and read our Case Study on retirement