The Stats Guy: The win-win-win of Baby Boomer ‘right-sizing’
Australia’s Baby Boomers are sitting on a housing goldmine, writes Simon Kuestenmacher.
Australia’s Baby Boomers are sitting on a housing goldmine.
Many live in large, mostly empty family homes that once buzzed with kids and chaos but now echo with silence.
As the oldest Boomers is 79, and the youngest 61, more are weighing up the idea of downsizing. Sorry, right-sizing. Wouldn’t want to suggest Boomers should make do with less.
It’s a big decision and most Boomers will age in place. But here’s the kicker – when older Australians move to smaller, better-suited homes, the benefits flow far beyond their front doors.
Right-sizing helps retirees enjoy a more comfortable lifestyle, frees up family homes for younger buyers and boosts the economy.
If the nation encourages more older people to downsize, we might experience one of those rare policy win-win-wins.
Let’s take a closer look at how everyone stands to gain when Boomers make the right move.
I must provide a trigger warning to all Baby Boomers reading this: This column is full of claims about what you should, might, must do. Buckle up!
Financial freedom, independence, peace of mind
A huge chunk of retirement wealth is tied up in the family home.
Collectively, Australian Baby Boomers own $1.3 trillion worth of property.
Since 1990, property prices have risen more than 600 per cent and far outpaced pension asset thresholds. That’s left many older Australians “asset rich but income poor” – sitting in million-dollar houses but scraping by on the age pension.
Downsizing unlocks this home equity. By selling the big house and buying a smaller, more manageable place, retirees can access a lump sum without sacrificing pension eligibility.
While that’s not relevant to every retiree, it’s a huge deal for many.
A recent report by the Retirement Living Council found that even modest tweaks to pension rules could make downsizing a “financial no-brainer” for thousands of older Australians.
That extra cash can top up their income, pay for travel, or cover future care needs.
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Such policy adjustments would tackle the biggest fear of Baby Boomer retirees – running out of money before running out of time.
A smaller home unlocks additional savings. Having fewer rooms translates into lower insurance, fewer repairs and no more mowing that damn lawn.
About 90 per cent of Australians who’ve downsized say they’re happy they did. They quote the reduced upkeep as the largest benefit.
The “right-sized” home makes life simpler, less stressful and more enjoyable.
Deliberately opting for less is, of course, not what the Baby Boomers were raised on. Their parents lived through two world wars and experienced a Great Depression too.
Helped by economic tail winds, Baby Boomers accumulated wealth and belongings, but continued to fear it could all be taken from them.
To be a bit provocative, Boomers think whoever dies with the most toys wins the game of life.
In a previous column, I introduced the concept of “dying with zero”.
Life is about meaningful experiences, not hoarding money. Photo: Harper Collins
The key takeaway from the Bill Perkins book that coined the phrase is that life is about maximising meaningful experiences, not hoarding money or stuff.
Rather than deferring enjoyment for a distant retirement, Perkins said we should spend our time, energy and money at the right moments in life.
Earlier positive and enriching experiences are more valuable because as older people we gain a lot of joy from reliving our personal highlight reel.
This isn’t an argument in favour of dying broke, but a plea to spend money in a way that allows us to get the most out of our finite time.
Selling the big house and settling for a smaller (and cheaper dwelling) allows Baby Boomers to create positive experiences with their wealth right now.
Travelling, helping their kids to enter the housing market, financing a pastime or even donating money while you are still alive can all be interpreted as being positive experiences for Baby Boomers.
Perhaps most importantly, right-sizing helps retirees stay healthier and more socially connected.
Large, old houses can become isolating or even dangerous with age. In contrast, modern downsizer homes or retirement villages offer safer layouts and more vibrant social lives.
The Retirement Living Council reports that residents are five times more socially active and 41 per cent happier than their peers in traditional homes. They’re also less likely to end up in hospital or aged care early.
Worried that’s just industry spin? Fair enough. ABS Census data also found that ageing residents in retirement villages had better mental health than people of the same age in other dwelling types.
It’s not so much the exact housing arrangement but rather the lack of social isolation that leads to improved mental health outcomes.
In other words, right-sizing helps Boomers to age with more money in their pockets and with better mental health.
Younger families gain the space to grow
Let’s zoom out from the individual household to the housing system.
Over 1.4 million older Australians live in homes bigger than they need. Nearly three in four people over 75 have at least one spare bedroom. That’s a lot of underutilised housing at a time when young families are locked out of the market.
If even a modest portion of these Australians moved to smaller homes, it would free up tens of thousands of family-sized houses.
One recent estimate suggests right-sizing could unlock more than 59,000 homes.
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‘Rightsizing could unlock almost 60,000 homes. Photo: Getty.
Considering that we aren’t building enough housing to ease the housing crisis, better utilising the existing stock is a necessity. That extra supply would relieve pressure on the housing market, especially for first-home buyers.
It also helps planners and builders shift their focus from endless urban sprawl to more sustainable, well-located developments.
When older Australians move into apartments or retirement villages in walkable communities, we make better use of existing infrastructure like shops, schools, and public transport.
The challenge here remains to develop sufficient apartment stock at acceptable price points.
Kids benefit too
Right-sizing doesn’t just help strangers, often it directly helps the immediate family.
When Baby Boomers unlock equity from the family home, they’re less likely to lean on adult children for care or financial support later in life.
Some may even pass on part of the proceeds now, helping younger generations with a home deposit.
The “bank of mum and dad” helps the individual family unit nicely (albeit at the cost of further widening the gap between homeowners and renters).
There’s also a deep emotional benefit. Kids gain peace of mind knowing their parents are living safely and comfortably.
No more worrying about dad climbing a ladder to clean the gutters or mum navigating stairs on her own. Sometimes, the next generation moves into the old family home.
Economy boost, health system benefits
When thousands of older Australians rightsize, the ripple effects extend into the broader economy.
Every property sale triggers activity – stamp duty for state governments, work for removalists, tradespeople, real estate agents, and developers.
A surge in right-sizing could deliver $2.9 billion in stamp duty revenue over time. Bizarrely enough, stamp duty might be one of the main reasons dissuading Boomers from downsizing.
There are savings too. Seniors in age-friendly homes are less likely to fall or end up in hospital. Fewer injuries, fewer hospital stays, fewer premature nursing home placements.
Considering the looming shortage of aged-care workers, this triple win is much needed.
And it’s not just about dollars. It’s about fairness. A housing system where the young can’t afford to buy, and the old are stuck in unsuitable homes, ultimately doesn’t serve anyone. Right-sizing helps rebalance the housing system.
What’s stopping us?
If right-sizing is such a good idea, why aren’t more Baby Boomers doing it?
Often, it comes down to two things – fear of financial penalties and emotional attachment.
Many retirees worry that selling the house will reduce their pension or leave them worse off. Others simply feel overwhelmed by the logistics or unsure where to go.
Thankfully, these barriers are fixable.
Adjusting the age pension asset test would allow downsizers to keep more of their sale proceeds. Combined with better information and support, these changes would give more Baby Boomers the confidence to downsize.
The right move at the right time
For Baby Boomers, the takeaway is clear – don’t wait too long to right-size.
Moving at 70 rather than 85 means you actually get to enjoy the lifestyle benefits while you’re still active and independent.
For governments and society, the message is just as urgent. Supporting right-sizing is a smart way to improve wider housing affordability, prepare for an ageing population, and improve the quality of later life.
Right-sizing isn’t just about square metres – it’s about freedom, connection, and dignity in later life. And when Boomers make that move, the whole country moves forward with them.
Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens.
