Should You Downsize in Retirement? Understanding the Trade-Offs

Big houses can mean a lot of maintenance - and falling behind on today's maintenance creates tomorrows headaches.

This blog is based on a recent episode of Weaving Gold, by independent financial advisers Nathan Fradley and Jordan Vaka.

For many approaching retirement, the idea of selling the family home can feel like a threat to everything they’ve built.

The house isn’t just bricks and mortar — it’s memories, Christmas lunches, and a sense of security. But for others, downsizing is a welcome relief — a chance to simplify life and enjoy more freedom.

The question isn’t just can I afford to stay here? It’s do I want to stay here?

Loss of Control

A lot of fear around downsizing comes from feeling out of control.

Retirement changes how we see money — suddenly, it feels finite. The income that used to appear each payday stops, and the numbers in your account start to look permanent.

That anxiety often drives the thought: maybe I’ll need to sell.

But like so many other big financial choices, downsizing isn’t only a financial decision.

It’s an emotional one.

For some, the home represents identity — it’s where the family gathers, where the kids can come home if life gets hard. Letting go of that space can feel like losing part of yourself.

Others find the upkeep exhausting: cleaning empty rooms, maintaining a garden they no longer enjoy, or holding onto possessions that have built up over decades.

In those cases, downsizing can bring a sense of calm and reclaim time for what matters most.

From a financial perspective, the benefits are often smaller than people expect.

While selling a $1.5 million home sounds freeing, the cost of buying a smaller property, plus stamp duty, agents’ fees, and moving expenses, can erode much of the gain.

And if you access that equity, it may reduce your age pension — because the home you live in is exempt from the assets test, but the money you release isn’t.

Still, when done with intention — to move closer to family, reduce maintenance, or embrace a new lifestyle — downsizing can work beautifully.

It’s not about unlocking equity. It’s about unlocking freedom.

Why, Not How Much

If you’re considering downsizing, think about why first, not just how much.

Do you want less work?

A smaller footprint?

A different lifestyle?

Financial advice can help you see the numbers clearly, but your heart should have a say too.

You’ve built a home, not just a house — any decision about it deserves time, clarity, and care.

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