Downsizing the family home. Upsizing the fun factor.
EMPTY-NESTER BABY BOOMERS ENTERING THE over-65 ‘retirement’ phase of their lives with the kids off their hands are selling up their Auckland family homes in droves - downsizing into an apartment or cheaper residence in provincial New Zealand, and spending up large with the ensuing proceeds.
In fact, acronym-speak has even come up with a new term for those partaking of the practice - SKIERS…. Spending the Kids Inheritance.
The Ministry of Social Development’s SuperSeniors organisation estimates some 1.25 million New Zealanders will be aged 65 and older by 2036 – a 77 percent increase on the 711,200 falling into that age bracket last year. That’s a demographic growth rate 10.5 times more than the under-14s.
Bayleys Real Estate’s national residential manager Daniel Coulson said that as most baby boomers had typically owned their homes for 35-plus years, and were usually mortgage-free, the release of equity yielded substantial cash reserves – particularly in high value residential suburbs such as Takapuna, Devonport, Remuera, Howick, Epsom, and Parnell.
“With the substantial growth in capital values witnessed in the ‘up’ phases of the last three property cycles, baby boomers are now asset rich - and in a fantastic position to cash out and spend up large on enjoying life,” Mr Coulson said.
“Take out a cool million dollars for a new two or three-bedroom apartment in the city or city fringe, buying into a retirement village, or buying a stand-alone low maintenance home in Hamilton, Tauranga, Whangarei or Napier, add on the Government’s weekly superannuation contribution topped up with a slice of Kiwisaver funds, and retiree/empty nesters should have plenty in the bank to enjoy their proverbial ‘golden years’,” Mr Coulson added.
So when you’ve sold up the old four bedroom family home in the ‘burbs of Auckland, here’s seven things you can do with your proceeds…
1. Buy a motorhome and tour around New Zealand.
Throw a kayak on the roof, and a couple of mountain bikes on the cycle rack, and head for those out-of-the-way destinations you haven’t been to since your honeymoon in a Morris Minor back in the ‘60s…. or those magnificent New Zealand locations and tourist destinations you’ve seen on Kiwi TV travel shows and always wanted to visit.
Think… Ninety Mile Beach, Kauri Cliffs golf resort, Hobbiton, the hot pools of Rotorua, East Cape from Opotiki through to Gisborne, Whangamomona and the Forgotten Highway, the wineries of Hawke’s Bay and Cape Kidnappers golf course, Golden Bay, Hanmer Springs, the majesty of the West Coast glaciers, Central Otago with its wineries and adventure activities, or the remoteness of Bluff.
A self-contained second-hand motorhome sleeping two – three people, with kitchenette and its own shower and toilet amenities will set you back somewhere in the region of $100,000. That should be enough to secure an ex-rental van less than 10-years-old. For obvious reasons, expect the vehicle to have a high mileage. Conversely though, it should have been well maintained by its rental company owners.
Moving up in size, a 12 metre-long bus-sized Winnebago with pop-out lounge, laundry area, captain’s seats up front, lounge/dining area and permanent sleeping space for four or five people can be sourced for around $235,000.
Motorhomes and Winnebagos have their own self-contained ablution amenities, so your ‘free-camping’ options mean less reliance on having to book into motor parks and camp grounds (in the region of $25 per person per night).
Depending on the number of kilometres travelled each week, total time away from home, daily activities, and food and beverage options – either dining in preparing food bought from the supermarket or local farmer’s market, or dining out at winery restaurants – your annual ancillary spend could range from several thousand dollars up to tens of thousands.
As well as fuel, your budget should also include keeping funds aside for engine, body, and interior fittings maintenance, and running costs such as tyres and road user charges if operating a diesel vehicle.
2. Go cruising.
The Pacific, Asia, The Americas, the Mediterranean… the world is your oyster. Literally.
Allow for between $24,000 and $35,000 per couple per annum for three cruises – one out of/back to New Zealand and two on the wider global stage. This figure also includes economy class return airfares but doesn’t include spending on day trips while in port, or for extending your stay either before departing on the cruise, or on arrival at the final destination.
Inside cabins with no views are considerably cheaper than cabins with their own decks. Also, generally speaking, the smaller and more ‘boutique’ the ship or the more bespoke and ‘out of the way’ ports of call destinations are visited, the higher the cost.
3. Put aside funds for the grand-kid’s high school ‘field trips’ or university education.
Back in the ‘day’, a high school field trip may have extended to studying the Auckland volcanos for geography – including the one day ferry trip to Rangitoto – or a social studies trip to Rotorua to see a Maori cultural performance.
Nowadays however, high school field trips range from biology and environmental studies in the jungles of Borneo and Indonesia, through to Spanish lessons in Argentina, or rugby and cricket tours to South Africa.
Don’t think such international trips are the domain of posh private schools though… they are now commonly found in many state schools, too. Education tourism is now big business.
Rule of thumb - a standard international two week high school field trip is around the $6,000 mark, bearing in mind some of that total will be subsidising the airfares and accommodation of teachers required to accompany the group.
For around the same amount, you could also chip-in to assist the grand-kids’ university fees. With the new Labour-led Government generously contributing to the university fees, you could already have enough to get the planning in motion.
4. Buy a boat.
Aye aye skipper. Sling anchor and set sail me hearties…
Let the scent of the salt air fill your nostrils as you motor around New Zealand’s magnificent coastline.
Allow for around $63,000 for an ‘overnighter’ five metre ‘fizz boat’ with basic kitchenette hob and grill, and a double bed sleeping cabin. Installation of a tow-bar on the back of the car to tow the new boat is around $650.
For around $90,000 you can up the on-board luxury factor somewhat through the addition of a shower and toilet, a better quality kitchenette, and separation of the sleeping compartment.
At the top end of the scale, you can drop a cool $1 - $1.5 million into a second hand 20 metre second hand gin palace. For that you can expect three cabins – one with en-suite – along with a communal bathroom, full kitchen, lounge area, BBQ space in the back deck, and a secondary area for socialising on the deck.
Allow for around $12,000 per annum – including power and water – for berth fees at one of Auckland’s inner harbour marinas. Alternatively, a dry-stack berth storing vessels up to 10 metres long on top of each other costs around $9,000 per annum.
5. Go touring with the All Blacks.
For a start, the annual Championship schedule means there’s opportunities every year to head to Argentina, South Africa or Australia. Bolt on a couple of weeks either side of the big game and take in the likes of Machu Pichu in Peru, The Galapagos Islands off the coast of South America, a big game safari park in the land of the Springboks, or a visit to the wineries of Australia’s Barossa Valley.
Then there’s the end of year Northern Hemisphere tours which now include Bledisloe Cup games in the likes of Japan or the USA en route to old ‘Six Nations’ favourites of England, Ireland, Scotland, Wales, France and Italy.
With games in November, the autumn-scheduled European games deliver an outstanding opportunity to not only watch a bit of rugger but also get in some Christmas shopping for the grand-kids.
Allow for around $10,000 per person for both The Championship and end-of-year tours - with spending money extra.
6. Live four or five months of the year in the sunshine.
Lock up the Auckland abode over the wet and dreary winter spell, and head off to the warmth of the Pacific Islands of Fiji, Samoa, Tonga, or Papua New Guinea, South-East Asian destinations such as Thailand, Vietnam, Bali, or Cambodia, or Australia’s Sunshine Coast.
Heading out in May/June, and coming back in September/October, you’ll avoid the rain, wind, and chills. To make a bit of spare cash on the side, or to stretch the holiday further, you could always rent out the Kiwi-abode on Airbnb while you’re away.
In the Pacific Islands, ‘flash-packer’ resorts – the ‘next generation’ of back-packer lodges where guest comforts rival those of three star holiday resorts – are very much on trend. We’re not talking about the five-star resorts on Denerau, but laid-back venues along the coasts of both Viti Levu and Vanua Levu, as well as the more remote island groups.
Allow for around $300 per week for accommodation - with food and beverage spending on top. Return economy class airfares and internal transfers from Nadi will be in the region of $700 - $1,000 per person depending on when you book and your end destination.
Meanwhile up in Asia, around $300 per week will get you into a relatively comfortable one or two-bedroom holiday home or apartment which should have access to a pool or be close to the beach. Food and beverage is markedly cheaper in Asia – particularly if you’re into ‘street food’. Allow for around $10 per person for dinner.
Over on Queensland’s Sunshine Coast, budget for around $1,500 per week for an apartment in a condo’ complex. Again, additional expenditure is dependent on what recreational activities you are participating in, and whether you’re dining in or dining out.
7. Bequeath an annual amount to charity.
As Saint Francis of Assis said “it is in giving that we receive.”
So think about sharing around some of the wealth with the likes of the Royal Society for the Prevention of Cruelty to Animals, Make-A-Wish, the Royal New Zealand Foundation for the Blind, the Salvation Army, Hospice, Barnardos or the Starship Foundation.
Whatever your philanthropic leaning, you’ll find a charity that works in that sector.
And, if the charity you donate to is registered as such with the Inland Revenue Department, remember to claim back a third of your donation in a tax rebate the following year. That way, you’ll have more cash ready to donate next year.
8. Upgrade the family bach.
Sure that fibrolite shack with corrugated iron shed as a garage has served the family well every Christmas at the beach since 1953, but now it’s time to holiday in luxury.
Think about having a new designer home constructed on the land - allowing for around $350,000 including council consenting fees, and add-on additional costs if the location is somewhat remote -requiring extra travel by the tradies and delivery of building supplies. An en- suite off grandma and grand-dad’s master bedroom is of course a must. Remember if buying a coastal property however, that waterfront real estate does attract a premium price compared to a section two or three blocks back from the surf.
Then take the family bach to a new dimension with landscaping. Think about adding a spa pool, outdoor entertaining area with a pizza oven, built-in BBQ with bar unit underneath, and a petanque court.
Inside, the open plan dining area should flow into the lounge - which should feature a wall-mounted 52 inch curved screen TV and wireless surround-sound speakers for watching sport with the son/son-in-law and your mates when they come to stay, as well as Disney and Pixar movies with the grand-kids.
Upgrading the bach also ties in perfectly with buying a new boat for fishing with the lads (see suggestion four), and towing the grand-kids around the bay in a sea-biscuit. And when extended family want to stay, you can accommodate them in the motorhome or Winnebago (see suggestion one).