Demand for smaller houses rises as asset-rich but cash-poor retirees look to downsize
often downsized their homes or moved to retirement villages.
Retirement villages had standalone houses and facilities including swimming pools and gyms.
Demand for smaller homes was also growing.
“There are a lot more people looking at smaller houses because they are cheaper. Superannuation is not great . . . if you are asset-rich and need the money to live off.”
Most people spend much of their lives trying to save for their kids and putting money away to enjoy life in their later years.
“So instead of scrimping and scraping, you’re going to want have a bit of fun when you retire. What’s the point of working and not being able to enjoy it?”
Asset-rich means you have options
Craigs Investment Partners investment director Mark Lister said people who were asset-rich were “quite lucky”.
“They have options . . . and that is the good news.”
They could downsize, rent a smaller place, live with family or in a granny flat and use the capital to generate a return.
There were other financial tools such as a reverse mortgage but they would need to seek sound expert advice, Lister said.
“You are probably younger than you think you are,” he said.
“If you’re 65, and you’re just retired you know there’s every chance you live to 100. So, you don’t want to put yourself in a position where you’re burdening yourself in the future by not making the right financial decisions.”
Term deposit rates of 6 per cent were also attractive — but that was not going to be the case forever and he expected rates to drop.
Lister said it was probably going to get harder to generate that level of return off savings.
Hard to change asset or money into retirement income
Te Ara Ahunga Ora Retirement Commission personal finance lead Tom Hartmann said it was difficult to draw a regular retirement income from a lump sum.
“In the past, people used to try to stick a huge lump sum in term deposits and live off the interest so that they didn’t deplete their capital, but