How to make a sea or tree change work
- Financial Planning
As the kids gradually fly the coup and newfound freedom emerges, many of us feel the urge for a fundamental change in our living environment. For many years the classic ‘sea change’ was favoured by those on the cusp of retirement as many flocked to the attractions of a sunny and salty lifestyle in burgeoning seaside towns.
This yearning for a new living experience then expanded to those preferring a ‘tree change’ because they wanted to escape the cars and concrete of suburbia for a gentler and greener retreat into a secluded mountain hideaway. Still others are now looking in the opposite direction and moving toward the city centres and the attractions of apartment living, surrounded by cultural and social facilities.
What’s driving the change?
Fuelling this spirit of adventure in the 50 plus cohort are factors like healthy superannuation nest eggs and the blow out in property prices in our big cities. People who’ve left the expenses of child rearing behind are thinking twice about whether they really need the big suburban home and all the hassle it can bring.
They’ve found if they downsize, they can unlock some capital and put their lifestyle priorities first. Often they like to spend more time enjoying life a bit more so they end up travelling overseas, boating or being a ‘grey nomad.’
It may seem like a very appealing recipe for making the most of life but you’ll find a bit of planning is essential to make it all work smoothly and to ensure you’re making the right moves.
Is the grass always greener?
The first step is to look beyond all the sunny and surreal attractions, which a new location can beckon within, and make a sober and sane assessment of the pros and cons of a major move. Here are a few questions to consider in making this assessment:
- What lifestyle activities do you really want to enjoy on an ongoing basis? Try to avoid vagaries such as “having greater freedom and more relaxation” and get down to specific activities and pastimes, which you currently engage in and know you want to keep up or increase doing.
- Do you and your partner agree on making a move? What would you enjoy doing more of together in a new location?
- Who will you be moving away from? Are there friends and family who you currently enjoy frequent interaction with and who you will be more isolated from if you head for the hills or the beach?
- Have you considered everyday conveniences and how important they are to you? A country town or seaside village may not offer the same amenities close at hand, such as shops, clubs and medical services. These may not seem like major issues but often we don’t realise how important they are until we’ve left them behind.
Make sure your decision is based off realistic expectations
Dipping your toe in the water
One strategy which can help you make a balanced decision is to ‘try before you buy.’ Consider the option of renting your current home out or getting one of your kids, grandkids or a friend to housesit for a few months, while you rent a home in your prospective new location.
If that’s not practical, just take an extended holiday there for a few weeks and you’ll get a real feeling for what it’s like to live there without doing anything permanent.
Make sure the financial aspects work
Selling a home, changing or down-scaling your work and establishing yourself in new surroundings can create quite a shake up to your finances. Opportunities are created but there are also some traps to watch out for.
If you sell your home and buy at the new location, you may have the chance to free up some capital. But how you utilise these funds can be a crucial decision. You could use it to pay down other debts and simplify your finances. This can be particularly useful if you’re carrying high interest debt, such as a big credit card balance.
Another option which could reap real tax benefits is to squirrel some extra away into your super. In some cases boosting the super of a non-working spouse can give even greater net results.
Still others may want to invest the money in other ways. You may want to help out the kids with their finances or just use it to enjoy life more.
The right answer will vary depending on personal circumstances and objectives, so some careful consideration is needed and this is where a trusted financial planner can be of great help. They can project various options for you to let you compare the pros and cons of different strategies.
In the end, you’ll be able to make a more balanced and informed decision on how you can make your sea, tree or CBD change a really successful one.
Have you or someone you know taken the leap to a new location? Share what you’ve learned below.