Plan to get the most out of ‘downsizing’

The prospect of a carefree retirement at the traditional age of 60 to 65 is becoming an increasingly remote possibility for many people.
However, says Harcourts Africa CEO Martin Schultheiss, proper planning can bring it closer, and one of the most important elements of that planning should be to pay off debts – including home loans - as early as possible.
“The Association for Savings and Investment (Asisa) calculated earlier this year that the average monthly pension in SA is less than R3000, and advised that people should keep working for as long as possible to preserve their capital instead of using it to fund their retirement.
“It also said consumers should use any spare cash while they were still earning to pay off debts and then invest more for retirement, even if this meant deferring their material aspirations for several years.
“And we would like to add that following this course will also enable homeowners to derive the most benefit from downsizing to a smaller property, which has become something of a staple in retirement planning.”
Schultheiss notes that the housing crash of 2008 and 2009 was particularly tough on the upper end of the market to which many 50 and 60-somethings had already graduated. “This narrowed the gap between the upper and middle markets and in many areas still means that smaller homes are now not all that much cheaper to buy.
“In addition, many homeowners borrowed heavily against the equity in their large properties during the last boom and increased their mortgage burdens, making it even more difficult for them to make a profit on trading down now.”
Nevertheless, he says, it still makes sense to downsize. “In fact we suggest that people make the move as soon as they become empty-nesters. Middle-aged homeowners spend between 20 and 50% of their incomes on housing costs and most can achieve considerable savings by moving to a smaller property that is cheaper to run and easier to maintain, even if their bond repayment is not that much lower than before.
“These savings can then be put towards paying off the property and other debt so that they are ‘free and clear’ when they do retire, and can enjoy a better quality of life in their later years.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us