For many South Africans, retirement is no longer looking like the long-promised reward for decades of work. According to FNB’s latest Retirement Insights Survey, 74% of middle-income retirees say their cost of living has been higher than expected, forcing many to rethink what financial security in retirement really means.
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Inflation, healthcare, debt and family financial obligations are eating into fixed incomes, with as many as 40% pursuing a side hustle to supplement their income.
Grant Smee, CEO of Only Realty Property Group, shares that this raises a bigger question for middle-income retirees: What happens when the home you planned to retire on is worth less than the retirement option you now need?
Why the old property logic no longer holds
For many South Africans, the family home has traditionally been viewed as the “ultimate retirement safety net”. The expectation was that homeowners would pay off their bond, sell the property, downsize and use the remaining equity to fund retirement. However, Smee says that assumption no longer always holds true.
“In reality, many retirees are trying to sell large, freestanding homes in inland areas where buyer demand is relatively weak,” he says. “At the same time, retirement estates, assisted living communities and secure sectional title developments continue to attract strong demand, driving prices higher. As a result, many retirees are finding that downsizing is no longer as affordable as they had anticipated.”
South Africa’s ongoing semigration trend is adding to the challenge. While many retirees are relocating for lifestyle, healthcare, safety and to be closer to family, these same factors are attracting buyers of all ages, pushing coastal property prices higher.
When the family home becomes a burden
More than one in three retirees surveyed by FNB said their retirement housing costs have been significantly higher than budgeted.
According to Smee, many retirees are not in this position because they failed to build wealth through property. Rather, the property they own no longer suits the retirement they can afford. “A home that made sense while you were working and raising a family may not make sense once you are living on a fixed income,” he says. “Rates, maintenance, insurance, security and utilities can turn a valuable asset into a monthly financial burden.”
This is why retirement communities are becoming more attractive despite their upfront cost. A smaller, purpose-built home in a managed estate can replace unpredictable maintenance and security expenses with more predictable monthly costs.
Why retirement property decisions must be made earlier
Smee believes the findings highlight the importance of planning well before retirement. “Too many retirees wait until their house is too expensive to maintain, their health needs have changed or their pension funds are dwindling before they ask whether remaining in the family home still makes sense,” he says. “By then, their options are often far more limited.”
Instead, he recommends asking these questions well before retirement:
- What is the family home really worth? Consider its realistic market value, not its sentimental value.
- What would it cost to replace it? A smaller home is not automatically a cheaper one.
- What level of support might you need in future? Healthcare, security, transport and proximity to family should all factor into the decision.
- When will the home loan be paid off? Entering retirement debt-free provides greater financial security and is paramount to financial freedom.
- Is there a Plan B? Selling is not always the only or best option. Renting out part of the home, downsizing gradually or testing a new location first may make more financial sense.
Smee says the key takeaway is not that everyone over 60 should sell their family home, but that these decisions should be made while people still have options.
“Ask yourself these hard questions in your late 50s rather than under the pressure of rising maintenance costs, poor health or dwindling finances. In a market where downsizing no longer always releases the capital people expect, timing has become one of the most important property decisions of all” he concludes.
