Trading down at pension age can be good for the soul
Trading down? A smaller car costs less to run. Or, if if it suits your lifestyle, what about a bike or an e-bike?
As pension age approaches, so too might thoughts of change-making. Often, this entails considering the merits of trading down to better suit your plans, life circumstances and pocket.
For farmers considering stepping back or retiring, long-term land leasing can be a useful option. Particularly when the farm has no identified successor, or the presumed successor may not yet be ready to take over.
According to Teagasc, while short-term renting (conacre) of lands once played a huge role in Irish farming, long-term land leasing is gaining popularity, not least because it means that while the lessor steps back or pursues other activities, the land and buildings will still be available in the future should a successor return to farm.
Other positive considerations include the fact that the income tax incentives first introduced in 2014 and still in force today can be availed of. Also, that provided all requirements are met, the land can now be leased for up to 25 years without impacting a landowner’s ability to qualify for Retirement Relief from Capital Gains Tax.
As retirement approaches, some might find peace of mind by securing good legal and financial advice before transferring ownership of their farm to a child. Others might plant forestry on their land to maintain farm income while reducing the overall labour requirement.
While incentives to trade down are often financial, those that entail letting go of surplus ‘stuff’ can be life-enhancingly feel-good. After all, the accumulation of belongings that decades of living tend to deliver can particularly feel overwhelming when it’s unused, unwanted and feels like clutter.
Sometimes, all we need to clear things out is a little time to review what we have. Take a look at your wrist. How many watches do you own? Besides wedding jewellery, family heirlooms and other pieces of sentimental value, how much do you wear regularly? How much do you want, or need?
Now step into or pull open the doors of your wardrobes. Take a long, critical look. Are you still wearing the sequinned evening gowns, feather boas and stilettos you once adored? What about the tuxedos, dinner jackets, morning and waistcoats?
Do you still look great in them? Did you ever? Do they still fit? Are they a requirement for the way you currently live? If not, now might be an excellent time to donate them to charity or to someone who’d love and appreciate them. Or to sell them online. Anything, rather than keep what you no longer require.
The same applies to car collections, boats, tractors, scuba diving gear and televisions. How many motor vehicles do you have? How many, if any, do you need? Do you still need a 7-seater estate? A pickup truck? A jeep? A SUV? Did you ever need a SUV? Trading down can be the excuse you need to clear out the surplus, and live a leaner, more sustainable and minimalistic life.
Furniture, too is worth considering. Have you gathered sculptures, wall hangings and other art pieces over the years? Do they still serve and delight you? What about the oversized dining tables, or surplus sofas, chaise longues and pouffes? Are they necessary, or elation-inducing? If not, will you let them go?
What about your bike? Are you still good for scaling hills using your energy store and pedal power alone? At this time of taking stock and reviewing the value of your possessions, would trading it in for an e-bike, or something lighter, suit you better?
Sometimes, trading down at pension age involves freeing up equity locked in the home by selling up and buying a less expensive property.
Typically, depending on location, smaller homes incur lower mortgage repayments, utility bills and property taxes.
With that, any financial savings can be used for investment, for helping to finance your retirement and for repaying any debt that might be outstanding.
Looking after a smaller home means less space to maintain and fewer rooms to clean. If the garden is smaller, chances are it will be easier and cheaper to maintain. If you move to a new home, it will probably be more energy efficient, saving you money.
If it’s smaller but not recently built, the downsizing might make it possible for you to invest in cost-effective energy-efficient upgrades.
Trading down at this time in life can be the catalyst for relocating closer to family and friends. Moving closer to towns or villages can mean better public transportation, less time driving and more opportunities to walk or cycle around your neighbourhood.
If you move to a gated community or to an apartment complex, the enhanced security and adjacency of neighbours can bring peace of mind on the security front, along with a better sense of being part of a local community.
Because trading down can bring about so much positive change, it’s no surprise that it’s a popular move at pension age: “We’ve certainly noticed an increase in people, particularly retirees, looking to downsize from larger, often rural homes,” says estate agent Sinead Sinnott of Sheehy Brothers Estate Agents and Auctioneers in Kinsale.
“These are typically properties that have served as family homes for decades but now feel too big or burdensome to maintain once the children have moved out.
“For many, the upkeep of large gardens and general maintenance becomes too much. We’re seeing a clear shift toward smaller, more manageable homes, ideally within walking distance of town centres, with accessibility to shops, healthcare, and public transport becoming increasingly important.”
Wisely, Sinnott always advises clients to consider downsizing sooner rather than later.
"Where possible, this is best done while they’re still healthy and able to manage what is often a very significant life transition,” she says.
“As leaving a home you've lived in for 30 or 40 years can be emotionally and logistically challenging, planning can make the process much smoother.”
Perhaps unsurprisingly, bungalows and single-storey properties remain the most popular choice among those contacting Sheehy Bros to downsize. But Sinnott says that, unfortunately, these sorts of homes are in very short supply.
Because of this, many opt for apartment living, of which she says: “This can be a big adjustment for some people, but it’s a good test launch pad for people approaching retirement and assessing their options in a new area.”
When it comes to choosing what location to retire to, Sinnott says Kinsale is a popular choice. “Regular bus routes between Kinsale and Cork city are a key factor for many retirees choosing to relocate here,” she says.
“The Local Link bus service connecting Kinsale to other West Cork towns and villages is another major draw.”
