Downsizing in retirement
Read time: 5 mins

Downsizing in retirement

As you approach retirement, you might be thinking about how you want to live your glory days. Downsizing from the family home is a popular way to scale back and access extra money for many Australians. Now, the Government has introduced extra measures that could help increase your super balance.

If you have excess funds from the sale of your home, you can contribute up to $300,000 of the proceeds into your super. 

What is downsizing in retirement?

Downsizing is the process of selling your current family home and buying a smaller home to move into. As you get older, you may find that living in the family home is no longer practical. After all, it may be increasingly difficult to clean and maintain a bigger home, especially if grown children have moved out. A smaller home has advantages such as lower maintenance costs and more location choices that are affordable. 

As with most things, there are pros and cons to downsizing your home when you’re nearing retirement. 

What is the Downsizer Contribution Scheme?

The scheme gives you a once-off opportunity to significantly increase your super balance beyond the usual limits without being penalised. You can do this by using the proceeds from the sale of your family home and investing it tax-free into your super account, which can help fund your retirement for longer.

Advantages of downsizing

  • You can buy a new home that better suits your current and future needs, whether that’s accessibility (with one floor or a lift), a smaller garden or less space to clean and maintain, or a more convenient location closer to shops or family and friends.
  • If you’re in a smaller space, you’ll be less likely to fill it with things you don’t need or use such as excess clothes and furniture. 
  • Your electricity or gas bills may be lower as you use up less energy to warm or cool a smaller house.
  • You could save time and money on travel by being closer to shops, friends, family and social activities
  • You can quickly boost your retirement savings. If your new home costs less than the proceeds from your old home, you’re able to deposit up to $300,000 of the sale proceeds into your super account. This is called a downsizer contribution, and it could mean you pay less tax and be more comfortable in retirement.

Disadvantages of downsizing

  • The cost of selling may outweigh the potential profit. Factor in costs such as tidying up your current house, removalists, real estate agents and lawyers.
  • There may also be costs for purchasing a new home such as stamp duty, building and pest inspections and legal fees. 
  • The process of decluttering, packing and moving can be overwhelming. Consider your emotional – as well as your physical – health before moving. 
  • What kind property will you be buying? Less space doesn’t necessarily mean you’ll be paying less. Do your research on both the location and the type of house you want to buy.
  • Selling the family home can be emotional. Your home holds lots of memories, and you might also be moving away from your friends and network.
  • Reducing the proportion of your overall wealth invested in your home could affect your eligibility for the Governments Age Pension, or other benefits such as the Pensioner Concession Card.

How does a downsizer contribution work?

The benefit of the downsizer contribution is that you can increase your super without some of the usual restrictions associated with age and contribution limits. 

  • Downsizer payments into super are tax-free.
  • The usual age limits on extra super contributions don’t apply.
  • The usual limits on how much you can add to super per year don’t apply.
  • You can make a payment even if you have a total super balance greater than $1.7 million. 

Are you eligible?

There are some eligibility criteria you and your partner need to meet, including: 

  • You must be 65 or over when you make the contribution (if you’re making a couple’s contribution you must both be 65 or over).
  • You (or your spouse) must have owned the home for 10 years or more.
  • You can’t have made a downsizer contribution before.
  • The contribution into your super account(s) needs to be made within 90 days of you receiving the sale proceeds (usually the date of settlement).

The maximum contribution is $300,000 for individuals, or $300,000 each for couples ($600,000 in total).1 You should also consider how it might impact your eligibility for the Age Pension, as the extra money will count towards the assets and income test. The downsizer contribution will also count towards the $1.7 million transfer balance cap, which applies when you move your super into the retirement phase. 

We recommend speaking to one of our experienced advisers to find out more about eligibility and contribution caps.

How to apply

If you’re ready to make a contribution, send us a completed Downsizer Contribution Form.


Here's a handy checklist if you're thinking about downsizing in retirement.

  1. Research the financial implications

    Research carefully before deciding to sell your family home. Some of the costs for selling might include tidying up your current house, removalists, real estate agents and lawyers.
  2. Try before you buy

    Take the time to get to know an area before you move there. If you have the opportunity, rent first before you buy.
  3. Declutter before you move

    One handy idea is to sort your possessions into categories such as ‘Keep’, ‘Sell’, ‘Donate’ and ‘Bin’. If you’re selling or donating items, do this well ahead of time.

  4. Get the sale process started well in advance

    This can help alleviate stress from a quick move.
  5. Consider the purchase costs for your new home

    These costs could include stamp duty, building and pest, legal fees and moving costs. Ensure you set aside enough money from the profits of your sale.

  6. Downsizing contributions

    Consider downsizer contributions and any implications of selling your home on your pension eligibility. You can speak to our experienced advisers about the assets and income test.


Want to find out more about the downsizing scheme?

Speak to one of our experienced advisers at no extra cost to you.

Request a callback

1 The maximum amount for an eligible downsizer contribution is the lesser of $300,000 or an individual’s share of the sale proceeds.

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