Retirement Life
12 August 2026
The downsides of downsizing
For thousands of asset-rich, cash-poor retirees, selling the family home and pocketing the difference seems like an obvious way to boost income in retirement. But financial expert Martin Hawes says downsizing is often far more complicated than it appears.
"On the whole, I don't think downsizing works unless you are prepared to shift locality,” Hawes says, acknowledging that there are always exceptions.
“I think it's very easy to say we're going to downsize, but much harder to execute. And to execute without losing your networks – and while getting a significant amount of capital to fund a better lifestyle.”
The cost of moving away
Selling in a major centre and relocating to a smaller town can release valuable money to help fund retirement. Hawes uses the example of moving from say, Christchurch to Waimate South. But the financial gains can come at a social cost.
"If you shift locality, you immediately go into moving away from friends, family, your network, professional advisors, the whole nine yards," Hawes says.
“Do you know anybody in Waimate? And if not, are you both extroverted enough to go out and meet people?”
Building new social connections can be harder later in life. Moving away may also mean losing easy access to healthcare services and specialist medical care.
Staying local often doesn't stack up
For those hoping to stay in the same neighbourhood, the numbers can be disappointing.
"If you move around the corner, you're probably not saving much money at all," Hawes says.
Selling and buying involves real estate commissions, legal fees, moving costs, building inspections, repairs and renovations. Then come the expenses that often emerge after moving in.
"I guarantee the sofa doesn't fit. And that carpet, you just can't possibly live with that. So you've got to re-carpet the place. And actually, you know, the bathroom needs a bit of work as well," Hawes says.
By the time those costs are accounted for, the financial benefit of moving to a smaller home nearby can be far less than expected.
“I think it's very easy to say we're going to downsize, but much harder to execute. And to execute without losing your networks – and while getting a significant amount of capital to fund a better lifestyle.”
—Martin Hawes
Living alone in a large home
For widows and widowers living alone in a family home, downsizing can seem like a no-brainer, as maintaining a large property can become physically demanding, as well as expensive.
Hawes points to the example of a woman living alone in a large family home.
“She's struggling to keep the garden, needs some help to do that, and to do the general upkeep on the house. But she owns a large house and not a hell of a lot else,” Hawes says.
Rather than selling, he believes many homeowners may be better off using the value tied up in their house to improve their quality of life using a home reversion product or similar.
“I think, rather than switch locality, unless she's going to a place where there are family, and maybe friends even, then she's actually better to stay put and use some kind of home equity release to pay for somebody to come in and do the garden for you. Maybe somebody to come in and clean once a week,” Hawes says.
He says homeowners should also consider alternatives such as taking in a boarder, creating a self-contained flat, or adding a sleepout or tiny home to generate rental income.
Lifetime Home offers a home reversion product that allows homeowners to stay in their own home while unlocking its value without taking on a mortgage, any debt, or paying interest. The homeowner can sell a slice of their property to Lifetime Home in return for receiving a regular income for up to 10 years and retaining ownership of the rest of the home.
More than a financial decision
Downsizing is not just about the money. Moving house can bring emotional stress, disrupt routines and mean adapting to unfamiliar surroundings.
"As you get older, you have to relearn how to drive a house," Hawes says.
That can mean learning a new layout, working out unfamiliar appliances like the oven and dishwasher and adjusting to different day-to-day routines – all things that can become more challenging as we age.
Planning ahead
Rather than waiting until later life to make a housing decision, Hawes believes people should think carefully about where they want to live as they age.
"I think housing is one of the things that people should sort out while they're younger," he says.
He recommends finding a home that will work in the long term — ideally a single-level property that can comfortably support ageing in place — and making that move in your 60s or possibly 70s.
"Experience teaches me that downsizing is easy to say but hard to do," Hawes says.
The advice given here is general and does not constitute specific advice to any person.
Written by:
Sonia Speedy
Sonia Speedy has been a journalist for over 20 years, working in newspapers, magazines and radio. She also runs an online platform for parents at familytimes.co.nz. She lives on the Kāpiti Coast with her young family and loves writing stories that help make people's lives easier.
Turn your home's equity into a steady retirement income.