Can’t bear to downsize your home? Think of it as rightsizing

SINGAPORE – It all started over a get-together of old friends and empty nesters whose children are grown up and have moved out of the family home.

Patrick Chan and his wife Julie have lived in the same detached house for more than 30 years. It is where Julie grew up and, after she got married, raised her children and watched her family grow.

Today, things are different.

Their sons are married and have their own homes, and their daughter is working overseas. Their rooms have become storage rooms.

On most days, it is just Patrick and Julie and their helper.

One evening over dinner, Patrick casually wondered if they should sell the house and downsize to a smaller place.

It was a simple question, but it sparked an angry outburst from his wife, who viewed the proposition as a downgrade in lifestyle and status.

“I can’t talk to her about money or downsizing. She gets so emotional,” says Patrick with a sigh.

“Our current place was last renovated before we moved in with her parents. We added another floor.

“Every day feels like a military operation – I have to plan my movements to avoid climbing up and down the stairs multiple times,” he adds.

Bothered lately by his cranky knees, he figured it might be more convenient to move to a more compact home with newer fittings that could be cheaper to maintain, easier to clean and better suited to this stage of life.

Doing so would also allow the couple to unlock the money tied up in the house Julie inherited when her parents passed away.

This could give them more financial freedom to enjoy retirement, including spending on travel, healthcare, hobbies and other things they value, without constantly worrying about money.

Unfortunately, Julie does not feel the same way. She is emotionally attached to the place and the neighbourhood, though in her heart she knows Patrick is just being practical.

Honey, I shrunk our home

Like Patrick and Julie, many ageing home owners in Singapore are asset-rich but cash-light, with some living in homes far larger than their current needs.

Yet despite years of policy nudges, incentives and rising maintenance costs, they remain reluctant to downsize their homes, despite the potential boost to their cash flow during retirement.

Loss aversion plays a powerful role. Downsizing may result in a net financial gain, but giving up space, familiarity and status can still feel like a loss.

There is also the “endowment effect” where people tend to overvalue what they already own irrespective of its market value.

Social factors matter, too. Many older Singaporeans live in communities where they have built relationships over decades.

Moving to a new environment means rebuilding social networks, which can feel daunting as one gets older.

Alfred Chia, chief executive officer of financial advisory firm SingCapital, says the greatest resistance is often emotional rather than financial.

“A home represents decades of memories, family milestones and familiarity. Many retirees also see their home as part of their identity, so moving to a smaller home can feel like giving up a part of their life,” he says.

There are also uncertainties.

Common questions include: Will I regret selling? What if property prices continue to rise? Will I have enough for retirement? Where should I move to?

This is why Chia encourages his clients to reframe the decision as rightsizing – aligning one’s housing assets with retirement needs – rather than downsizing, which carries negative connotations of loss and compromise.

For some people, rightsizing may indeed involve moving to a smaller flat. For others, it could mean relocating to a different neighbourhood or upgrading to a more accessible unit.

The question is not whether you can afford to remain, but whether your home still supports the retirement lifestyle you want.

To help make the right decision, Chia suggests asking yourself three questions:

If your home no longer fits your needs and your liquid assets may not meet your retirement and emergency needs without relying on the property, then rightsizing may be worth considering.

This was how former journalist Jeffrey Tsang executed his retirement plan.

“I had always planned that my private apartment would be sold and I would go to an HDB flat as I got older. I planned that I would do this when I reached 60,” Tsang tells The Straits Times.

He cites three reasons.

“First, the sale of the private apartment would fund my latter years. Second, the cost of maintaining an HDB flat would be lower. Third, the convenience and proximity of services are crucial for older residents,” says Tsang, who is in his 60s.

He used to pay about $2,000 a year in property tax for his private apartment, while the Management Corporation Strata Title charges came up to nearly $6,000 annually.

Now living in an HDB flat, he pays less than 10 per cent of what he used to fork out when residing in a private apartment.

Despite paying significantly less, he said, the standard of basic services, such as lift maintenance, is better.

There is a coffee shop just 50m from his block. The bus stop is about 80m away. A clinic is less than 100m away, with a supermarket right next to it.

There are also green spaces everywhere – the roof of the carpark is a landscaped garden, and there is a walking and running path just behind the block.

Tsang says: “There is even a senior daycare centre about 100m away, though I haven’t used that yet. This is almost ‘assisted living’, isn’t it? I do have my own space, and yet help is not far away.”

For someone who has never lived in an HDB flat, Tsang had his doubts about the move, adding: “I really didn’t know if it would suit me or whether there’d have to be big compromises.”

Three years on, the experience has been wonderful, he says.

“I appreciate that HDB and my town council provide so many good services and at such a low cost. If a lift breaks down, the repair response is within the hour. The lifts are maintained in great working order.

“The cleaners are really diligent. Besides the public areas, the common corridors and staircases are kept clean, unlike my old condo where hidden corners like staircases were used for various “storage” just because residents hardly ever went there,” he says.

His neighbours have also been a pleasant surprise. They are quiet, clean and neat.

When something does go wrong – for example, if someone hangs laundry in the corridor where it is not allowed – it can be reported through an app, allowing HDB to deal with it without residents having to get into a major confrontation.

Rightsizing is often described as giving something up: less space, fewer amenities, a change in status. But Tsang has come to see it differently.

“I think HDB living certainly suits me better at this stage of life. It has everything I need: affordability, convenience, security, safety, services. I really am happy,” Tsang says.

Do your homework

One of the biggest barriers to rightsizing is not the sale of the current unit, but finding its replacement.

Finding a suitable home is not always straightforward. Prime, well-located and senior-friendly units – especially those near amenities, MRT stations and healthcare facilities – are in high demand and often command premium prices.

In some cases, those who choose to downsize find themselves paying more per square foot for a smaller unit, eroding the financial logic of the move. This is especially true in mature estates where price differentials between flat types are narrower, property agents say.

Lease decay adds another layer of complexity. Older flats may fetch lower prices, but buying another ageing unit introduces long-term risks around lease expiry and resale value.

For retirees thinking about legacy planning or intergenerational transfers, this is a significant consideration.

Singapore offers various housing monetisation options to support eligible seniors who wish to unlock the value of their HDB flat to supplement their retirement needs.

These include the Silver Housing Bonus, which provides eligible citizens aged 55 and above with a cash bonus of up to $40,000 per household when they rightsize to a three-room or smaller HDB flat to boost their retirement income.

To qualify, you need to commit up to $60,000 per household to your Central Provident Fund Retirement Account (RA) after rightsizing. This money will go towards your retirement payouts.

For those not ready to move, the Lease Buyback Scheme allows eligible owners who are 65 or older to monetise their flat to receive a stream of income in their retirement years, while continuing to live in it.

You can sell part of your flat’s lease to HDB and choose to retain the length of lease based on the age of the youngest owner. Your flat must have at least 20 years of lease to sell to HDB.

The proceeds from selling part of your flat’s lease will be used to top up your CPF RA. You can then use your CPF RA savings to join CPF LIFE, which will provide you with a monthly income for life.

As for private property owners looking to downsize to a non-subsidised HDB resale flat, the Government has on July 28 lifted the 15-month wait-out period.

Previously, private property owners under 55 had to wait 15 months after selling their private home before they could buy a resale HDB flat.

The 30-month wait-out period still applies if you intend to buy a brand new Build-To-Order flat, apply for CPF housing grants, or take out an HDB concessionary loan.

For Singapore citizens who still own private property at the point of buying a resale HDB flat and are concerned about the additional buyer’s stamp duty (ABSD), the Inland Revenue Authority of Singapore (IRAS) provides an upfront ABSD remission.

This is provided the buyer commits to selling the private property within six months of completing the resale HDB flat purchase.

However, if the private property is not sold within six months, the full ABSD sum becomes payable immediately, with late-payment interest.

If you are buying your smaller replacement unit before selling your current private property, you have to pay ABSD upfront. You can apply to IRAS for a remission, stating your intention to downgrade.

Single Singapore citizens aged 55 and above may qualify for an ABSD refund when buying a lower-value replacement home if they sell their existing property within six months and meet other ownership and eligibility conditions.

Married couples, with at least one Singapore citizen, can also claim an ABSD refund if they buy a replacement matrimonial home and sell their first property within six months.

But do check the IRAS website as conditions may change.

The bottom line

In theory, downsizing your home should be a straightforward way to unlock wealth for retirement. Yet in Singapore, it remains one of the most underutilised retirement strategies.

For many home owners, a property is more than just an asset. It is a marker of security, social standing and generational wealth, making the decision to trade down far more emotionally and socially complex.

There is no one-size-fits-all solution, Chia says.

For some retirees, staying put in their current home remains the best option because of family circumstances, emotional attachment or financial considerations.

The key is to make an informed decision based on retirement goals, lifestyle aspirations and overall financial planning, not simply the size of the property.

“Source:[Can’t bear to downsize your home? Think of it as rightsizing] © Singapore Press Holdings Limited. Permission required for reproduction”