For advisers who have retiree clients looking to sell their house and make a massive lifestyle change, Noel Whittaker has a word of caution.
The noted financial commentator and author of 22 books, including Making Money Made Simple, says the benefits of downsizing are often outweighed by the disadvantages.
“One of the most dangerous things you can do in retirement is to make a total move of your house, because people are happy in their social network,” Whittaker said at a retirement seminar hosted by advisory firm Stanford Brown. “So many people sell up, and they go to Coolum on the Gold Coast and they’re bored out of their brain.”
Andrew Griffin, who hosted the event and heads up Stanford Brown’s retirement advice division, said advisers were increasingly being entrusted with the responsibility of helping clients work through the pros and cons of moving their base.
“I often have deep conversations with people when they are considering downsizing and moving to a place that is perhaps away from their home area, because it’s important to stress the importance of having their community around them in retirement,” Griffin said.
He explained that each client comes at the idea from a different angle, but something he usually recommends is that they spend a good deal of time getting to know the area and their own proclivities before they commit to a move.
“Every retiree has this wonderful image of living by the beach or moving up to Byron Bay or in the hinterland,” Griffin said. “A good strategy to consider is maybe renting out the family home and renting in the place you’re thinking about moving to. You want to experience a full year in the area first, see the highs and lows of the seasons, walk around and get to know the locals, ingratiate yourself in the community a little bit.”
Whittaker pointed out that, as people age, they tend to retreat from being actively social and making new friends. Leaving a community that’s been developed over a lifetime can be a traumatic experience for some.
“You make friends through your job, your church and things like your kids’ sport,” he said. “As you get older, those things start to go away, so you need to be very wary about moving.”
Griffin added: “Location is important but probably less important in retirement than social connections.”