Middle-aged home owners should downsize in preparation for a better retirement, a property group advised on Tuesday.
"In fact we suggest that people make the move as soon as they become empty-nesters," property group Harcourts Africa said in a statement.
The prospect of a carefree retirement at the traditional age of 60 to 65 was becoming an increasingly remote possibility for many people.
However, CEO Martin Schultheiss said proper planning could bring it closer, and one of the most important elements of that planning should be to pay off debts - including home loans - as early as possible.
"The Association for Savings and Investment (Asisa) calculated earlier this year that the average monthly pension in South Africa is less than R3000, and advised that people should keep working for as long as possible to preserve their capital instead of using it to fund their retirement.
"It also said consumers should use any spare cash while they were still earning to pay off debts and then invest more for retirement, even if this meant deferring their material aspirations for several years."
Schultheiss said the housing crash of 2008 and 2009 was particularly tough on the upper end of the market to which many 50- and 60-somethings had already graduated.
This narrowed the gap between the upper and middle markets and in many areas still meant that smaller homes were now not all that much cheaper to buy.
"In addition, many homeowners borrowed heavily against the equity in their large properties during the last boom and increased their mortgage burdens, making it even more difficult for them to make a profit on trading down now."
Nevertheless, Schultheiss said it still made good sense to downsize.
"Middle-aged home owners spend between 20 percent and 50 percent of their incomes on housing costs and most can achieve considerable savings by moving to a smaller property that is cheaper to run and easier to maintain, even if their bond repayment is not that much lower than before."
These savings could then be put towards paying off the property and other debt so that they were "free and clear" when they retired, and could enjoy a better quality of life in their later years. -Sapa
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