Your family home is a powerful asset, and not only because it’s usually your most valuable investment.

It’s special because it’s the place we raise our kids, full of both memories and possessions accumulated over many years.

It’s a big part of our finances, because paying off the mortgage is often our largest financial commitment. The house also forms the backbone of most Kiwis’ retirement plans.

By the time you retire, owning a home can give you one of the best possible financial outcomes: the freedom to choose.

You can stay in your home, hopefully mortgage-free, for as long as you like. Or you can sell it and downsize, freeing up cash for your retirement.

There’s a lot to think about.

Why downsize?

Downsizing can leave you with a chunk of cash and improve your lifestyle. With the right house, you’ll reduce your cleaning, gardening and lawn mowing to a minimum, as well as likely cutting back on your power and water bills.

With lower ongoing expenses throughout your retirement, you can make the most out of your income.

Depending on what you buy, you could also end up with cash left over from the sale of your family home. That money can be invested for the future or spent on something you love – maybe some travel.

The advantages of staying in the family home? You won’t spend tens of thousands on real estate and legal fees.

You can keep all your stuff, instead of having to declutter and sort it all out and, of course, you won’t need to move, which is always stressful.

Your kids might prefer you staying too. Often, they’re the ones most attached to the idea of the family home always being there.

Smaller isn’t always cheaper

If you’ve lived in the same house for decades, you may not have noticed the recent shift in the housing market.

There’s a greater demand for newer, low-maintenance, energy-efficient homes, which has pushed up their price. In Auckland, for example, larger houses have risen in value more slowly than apartments and townhouses over the past five years, according to QV.

As a result, selling an older family home to buy a smaller townhouse in a similar area will often be more like a straight swap than a way to free up cash.

If you want the cash and the townhouse, you may need to consider moving to an area where houses are less expensive.

How far you want to downsize will depend on your lifestyle – but regardless, switching from five bedrooms to a tiny house is going to take some getting used to.

Retiring and downsizing at the same time can leave you feeling as though your partner’s permanently underfoot, which might not be conducive to a happy life. (Did you know that ‘retired husband syndrome’ is a genuine stress-related medical condition for some wives?)

You’ll need to balance price against space, location and ongoing costs to make a good long-term decision about where to live.

Seeing a financial adviser experienced in retirement can likely help with some of these points.

Get creative

Don’t let other family members’ expectations rule your decisions.

If you’ve always dreamed about living in an apartment in the CBD, in a beach hut, or on a lifestyle block with chickens, this may be the only time you can realise that vision.

Perhaps you want to stay in the family home, so you can Airbnb the extra rooms – or, take out a reverse mortgage to release some equity.

It’s your retirement. If you have your financial planning in place, you should be free to enjoy the benefits of a lifetime of hard work.

New house, fresh start, extra income

For 30 years, Rosie Waller lived in a substantial family home on a third-acre, right on the lake’s edge in Rotorua.

But she found that as a single mum whose sons had both moved out, the house no longer worked.

“It’s high-maintenance, the power bills were expensive and there was a lot of gardening. Also, the house was ageing – even the cost of scaffolding to repaint it was really high.”

Waller, 64, had a plan. She’d had her eye on a run-down 1950s home in Lynmore, on the outskirts of the city, on a large site. She’d approached the owner about selling it, but it was five years before she got the call.

She bought the new place for just a fraction of the sale price of the family home.

“Most people said to me, ‘Have you lost your marbles? I can’t believe you’ve left such a beautiful property for this’, but I said, ‘Come back in a month and you’ll see what I’ve been able to do’.”

Waller had the old house renovated and moved in, then immediately began building a new place at the back of the section. It’s a single-level, double-glazed modern home.

“I took a lot of time thinking about heating and efficiency and modern appliances,” says Waller.

It also includes a self-contained unit with separate access, ideal for Airbnb guests and potentially for a live-in carer in the future. The renovated front house is rented out, providing both extra income and an added sense of security.

After completing the build and the renovation, Waller was still left with a lump sum to help fund her retirement.

She took voluntary redundancy and now works as a marriage celebrant which keeps her busy.

“This is my last house. I’ll live here until I go out in my box.

“It’s been a big change in lifestyle, but I don’t miss living at the lake. I’ve moved on and I’m not one for looking back,” she says.

“A house is just four walls really. It’s what you create there that makes it a home.”

Published 29 February 2019

This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.