Equity release sounds simple: unlock cash from your home without moving. But it’s not the only way - and for many, it’s not the best. If you’re over 55 and thinking about tapping into your home’s value, you’re probably worried about losing control, racking up debt, or leaving less for your family. The truth? There are smarter, safer ways to boost your retirement income without locking yourself into long-term costs that grow over time.

Downsizing: Sell Big, Live Smaller, Keep the Difference

Downsizing isn’t just about saving on maintenance. It’s one of the most effective ways to free up cash without borrowing. In New Zealand, the average family home is around 200 square meters. Many retirees live in homes twice that size. Selling a larger property in Auckland or Wellington and moving to a smaller unit or bungalow can easily net you $200,000 to $400,000 extra - tax-free.

Take Margaret, 68, from Remuera. She sold her four-bedroom house for $1.8 million, bought a two-bedroom apartment in Takapuna for $950,000, and kept $850,000. She now has a steady income stream from investments, no mortgage, and lower rates for rates, insurance, and heating. She didn’t take on debt. She didn’t sign away part of her home. She just moved.

Downsizing works best if you’re ready to let go of space. It’s not for everyone - but if you’re tired of cleaning gutters, fixing leaky roofs, or paying for unused rooms, it’s the cleanest financial reset you can make.

Downsizing + Pension Credit: Double Your Monthly Income

Here’s the secret most people miss: if you’re eligible for New Zealand Superannuation, selling your home and moving into a cheaper one might unlock extra government support. The Ministry of Social Development allows you to have up to $225,000 in assessable assets (as of 2025) and still get the full pension. If you’re single and your assets are under that, you get $525 a week. If you’re over, your payment drops.

Let’s say you have $300,000 in savings from downsizing. That’s $75,000 over the limit. Your pension drops by $1 for every $2,000 over. But if you use $150,000 to buy a smaller home and invest the rest in term deposits or KiwiSaver, your assessable assets might fall back under $225,000. Suddenly, you’re getting the full pension plus interest from your investments. That’s not equity release. That’s smart asset restructuring.

Home Reversion Plans: Sell Part, Stay Put - But Know the Trade-Off

Home reversion is often confused with equity release. It’s similar, but different. Instead of borrowing against your home, you sell a share of it - say, 30% - to a company. In return, you get a lump sum or regular payments. You keep living there rent-free.

Here’s the catch: when you die or move out, the company gets 30% of whatever the house sells for. If your home doubles in value over 15 years, they walk away with twice what they paid. That’s a huge cost. In 2023, the average home reversion payout was 30-40% of the home’s value. But the actual return on investment for the provider was closer to 8-10% annually, compounded.

It’s not a bad option if you’re 75+, have no family to inherit, and need cash now. But if you want to leave something behind, it’s usually worse than equity release.

Reverse Mortgage: The Closest Thing - But Still Risky

Reverse mortgages are the most common form of equity release. You borrow against your home’s value. No repayments. Interest rolls up. You owe more each year.

But here’s what most ads don’t say: after 10 years, you could owe 150% of your home’s original value. After 20 years? 300%. That’s not inflation. That’s compounding interest eating your equity.

And if your home’s value drops - which happens - you still owe the full amount. Your family has to sell or pay it off. No one wins.

There’s one exception: if you’re 80+, have no dependents, and need money for medical care, a reverse mortgage might make sense. But even then, it should be a last resort.

Work a Few More Years - Even Part-Time

Most people think retirement means stopping work. But you don’t have to. Working part-time - even 10 hours a week - can add $15,000 to $25,000 a year to your income. That’s more than most equity release schemes pay out monthly.

Think about it: a 65-year-old with a clean driving record and no health issues can easily work as a taxi driver, library assistant, retail helper, or tour guide. In Auckland, many cafes and garden centers hire retirees for flexible shifts. You keep your independence, your home, and your dignity. Plus, you stay active.

And here’s the bonus: if you delay claiming New Zealand Superannuation by even a year, your weekly payment increases by 5.5%. That’s a guaranteed return no investment can match.

Use Your KiwiSaver Wisely

If you’ve been contributing to KiwiSaver since your 20s, you likely have $100,000 to $300,000 saved. Most people withdraw it all at 65 and spend it quickly. But you don’t have to.

Instead of cashing out, move your KiwiSaver into a conservative or balanced fund. Then take out $1,000 to $2,000 a month as income. That’s $12,000 to $24,000 a year - tax-free if you’re over 65. You keep the rest growing. You don’t touch your home. You don’t borrow. You don’t give up control.

And if your KiwiSaver balance is low? Combine it with part-time work. That’s a powerful duo.

Government Support: Don’t Miss What You’re Already Entitled To

Many retirees don’t apply for benefits because they think they’re not eligible. That’s a mistake. In 2025, you can qualify for:

• Supplementary Support: Extra money for heating, food, or medical costs if your income is low.
• Community Services Card: Cheaper prescriptions, dental, and optical care.
• Rates Rebate: Up to $750 a year back on your local council rates if you’re on a low income.
• Accommodation Supplement: Help with rent if you’re renting after downsizing.

Apply through Work and Income. It’s free. You don’t need a financial advisor. Just fill out the form. Thousands of people miss out because they assume they’re too well-off. But the thresholds are higher than you think.

What Equity Release Really Costs

Let’s say you’re 70, own a $700,000 home, and take out a £200,000 equity release loan. Interest rate: 5.5%. No repayments.

After 10 years: you owe $350,000. Your home is now worth $850,000. You still have $500,000 equity.

After 20 years: you owe $600,000. Your home is worth $1.1 million. You have $500,000 left. But you’re 90. Your children can’t afford to pay off the debt. They sell. They get $500,000. You gave up half your home’s growth for $200,000 cash - and you paid over $400,000 in interest.

That’s not wealth building. That’s wealth erosion.

When Equity Release Might Make Sense

There are times it’s the right choice:

• You’re 80+ with no dependents and need money for long-term care.
• You have serious health issues and need immediate cash for treatments not covered by public health.
• You’ve already downsized, used your KiwiSaver, and still need more - and you’re okay with leaving little or nothing behind.

Even then, get independent financial advice. Not from the company offering the loan. From someone paid by the hour, not by commission.

Final Thought: Your Home Is Not Your Retirement Plan

Your home is shelter. It’s comfort. It’s stability. It shouldn’t be your only source of retirement income. The best strategies combine multiple tools: part-time work, KiwiSaver withdrawals, government support, and downsizing. Together, they give you cash without debt, control without stress, and dignity without sacrifice.

Equity release is a tool. Not a solution. And like any tool, it’s only useful when nothing better fits the job.