Right Sizing for Retirement

For most of us, the property we own is likely to be the most significant purchase we will ever make in our lifetime. From both a financial and psychological standpoint, it is also probably the most valuable physical asset we own. That is understandably the reason why it can be an overwhelming task when we reach a juncture where it is time to evaluate if right-sizing our property to fund our retirement is the right decision to make.

In this article, my agenda is to lay out some of the options and considerations pertaining to right-sizing, and I hope that this will help readers facilitate their decision-making and make a choice that keeps their hearts at ease.

We need to have a good sense of our current financial standing and the income required during our retirement years. Only with these figures can we determine how right-sizing our property can help supplement our retirement income.

Next, we need to calculate the proceeds from right-sizing. For example, if we currently reside in an executive Housing Development Board (HDB) flat and decide to right-size into a 3-room HDB flat, we must know the estimated selling and purchase prices of both the executive and 3-room flats, respectively. In addition to the selling and purchase prices, there are other considerations that need to be factored in to determine the net proceeds resulting from right-sizing.

  1. Outstanding mortgage loan 
  2. Resales levies 
  3. CPF refunds 
  4. Legal costs & agent commissions  
  5. Stamp duties 
  6. Renovation costs 

As there are various rules and regulations that apply to different individuals, it is best to seek advice from a trusted and competent professional in this area before executing any plans.

While the process of adjusting the size of one’s property to release funds for retirement can be practical and financially sound, it is also essential to acknowledge the emotional and psychological impact this decision may have.

1. Decades of Memories 

Right-sizing means letting go of a property that holds years of memories. It could be a family home where children were raised or simply a place to which we are very attached for sentimental reasons. Giving up such a significant aspect of our past can be a difficult and emotional task 

2. Identity and Self-Worth

The place we live in is often seen as an extension of our identities. Right-sizing often means downsizing, which may lead us to start doubting our self-worth and identity.

We must also believe that our identity is not tied to the kind of house we live in, the type of car we drive, the brand of clothes we wear, the bags we carry, etc. In short, we need to learn to live below (not within) our means.

We must also believe that with contentment, we find rest. Contentment is when we no longer crave anything we don’t have. It is not a passive acceptance of our situation but an active pursuit of what is important. It is a conscious decision to enjoy, appreciate, and be grateful for what we have while giving up cravings for the things we do not have.

3. Feelings of Loss 

While right-sizing may offer some financial freedom for retirement, it may also evoke feelings of loss, such as the loss of space, the loss of a familiar neighbourhood, or the loss of a lifestyle. It is crucial that we acknowledge, understand, and not neglect these feelings. At the same time, we should highlight the positive aspects of the financial freedom gained and look forward to the new space, neighbourhood, and lifestyle ahead!

4. Resistance to Change

Humans are creatures of habit, and a change in living arrangements can be a significant adjustment. Right-sizing may mean adapting to a smaller space, a new community, or a different lifestyle. Focusing on the opportunities and positive aspects of these changes can tremendously help in this transition.

While right-sizing involves closing one chapter, it also means opening the door to a new one. Developing an open and positive mindset while envisioning and planning for this new phase of our lives, such as exploring new hobbies, making travel plans, or simply enjoying a fuss and maintenance-free lifestyle, can be empowering and help mitigate the psychological impacts of right-sizing.

So, after giving the idea of right-sizing much thought and after having countless communications with the people involved, if individuals or couples decide that giving up their current property isn’t a viable option due to various financial and non-financial reasons, they can also consider options such as the Lease Buyback Schemes for HDB flat owners. Alternatively, they can explore renting out spare rooms or a combination of both to supplement their retirement income.

For private property owners, a local bank had brought back the idea of reverse mortgages to unlock equities out of a fully paid private property to top up our CPF balances with the intention of boosting the CPF Life payouts. With a fixed interest rate throughout the loan tenure and no monthly repayments, it seems like a compelling proposition for asset-rich individuals with limited liquidity. However, it is important for individuals considering this option to consult a trusted and competent mortgage specialist to fully understand the structure of this option and the repercussions before taking any action.

Right-sizing a property for retirement is a multifaceted decision that goes beyond financial considerations. At Providend, we advocate that life decisions should come first before financial decisions. Whatever choice we make, as long as it is made with careful and well-rounded thoughts, and the head and the heart are in alignment, it will be a decision made with wisdom that will keep us at rest.

This is an original article written by Toh Zhi Han, Client Adviser at Providend, the first fee-only wealth advisory firm in Southeast Asia and a leading wealth advisory firm in Asia.

For more related resources, check out:
1. RetireWell™ Part 2: A Tale of Two Retirees and Their Fortunes
2. How Should Property Fit Into Your Overall Investment Portfolio?
3. Reimagine Your Retirement Wealth Planning

*Providend is very excited to share that we are now ready to extend our service offerings to the younger accumulators who are looking for holistic, independent, conflict-free wealth advice!

For this group of younger accumulators, we know that it is not easy to make retirement planning a priority when other financial goals – buying a first home, for example, or saving for a child’s education – appear more pressing. Learn how we can help here.


We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current investment portfolio, financial and/or retirement plan, make an appointment with us today.

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