When deciding where you want to live and what sort of care you need, make sure you know the difference between a retirement village and what is called ‘residential aged care’.
Retirement villages are an independent living option. You buy the right to live in a retirement village under various types of contracts but the government does not help with any of the costs.
This is different to aged care where you receive full care and the fees are regulated by government, with the government paying some of these fees.
What is a retirement village?
If you want to spend less time looking after your house and yard, a retirement village may be a good option for you. Moving to a retirement village is a lifestyle option as it allows you to live in a community with other retirees. This can provide you with easy access to services, social functions and a network of friends.
The type of accommodation may vary and could be a unit, a villa or a house. In most cases you do not own your residence. Usually you will buy under a lease/loan type arrangement. The purchase arrangements are complex and usually involve quite long contracts. It is good to get legal advice to make sure you understand the contracts – particularly your rights and obligations, what you can and can’t do and most importantly, what it will cost. There are retirement villages which are operated by churches and other non-profit organisations, but many of them are operated by commercial businesses.
Did you know?
Before moving into a retirement village you need to review the contracts carefully to understand the legal structure.
There are at least eight different legal structures:
What does it cost for a retirement village
As with most accommodation options, there is a cost to move in as well as ongoing fees for the maintenance and services. You may also face fees when you leave. Or you may need to share some of the sale price with the operator in the form of a deferred management fee.
The fees are private commercial arrangements between you and the village operator and are outlined in your contract. The government does not subsidise the cost, so you need to do your budgets carefully to ensure you can afford the full cost.
Villages are governed by state legislation, but conditions can vary widely. Read the contract carefully to understand all fees and what money will be returned to you when you move out.
Don’t forget that just moving from one residence to another will also incur fees, such as removalist fees and new furniture or furnishings.
What care will I receive?
Retirement villages are an independent living option. So you need to be able to look after yourself but help may be close by.
If you do need some help with daily activities, you can access help through the Home and Community Care (HACC) program or be approved for government subsidised home care packages. Some villages may provide help with services at an additional fee to you.
Some villages have residential aged care on the same site which you can access when you are ready for a move to full care
What is my action checklist?
Are you thinking about moving to a retirement village? Here is a quick checklist of things to consider:
shop around and compare villages
decide on where you want to live and the style of accommodation
Which services are important to you and which are just nice to have?
Does the village provide access to aged care if you need to make that move?
Have you read the contract – and sought legal advice?
Have you worked out how much you can spend?
Do you understand the fees to move in, ongoing and when you leave?
check who is running the village and whether the village is accredited or registered
What are some tips and the traps to avoid?
Regulations vary– the rules vary from state to state. Tip: check the rules for your state
Running out of money - you usually won’t own your home in a village so you can’t use a reverse mortgage if money becomes tight. Tip: do your budgets carefully and don’t overspend
Selling time – when you want to move your residence needs to be sold. This can take a long time in some villages: Tip: ask how long the average sale is taking and think about how this might impact you
Where can I find out more?
What it will help you with
Website or phone
Retirement Village Association
This is an organisation that accredits member village operators to ensure quality of services
This service can act as an advisor, buyer’s agent or educator to help you understand retirement villages and make
This article is prepared by the strategy specialists at Aged Care Steps, a company supporting financial planning advisers who provide planning advice for aged care. To find a professional adviser who specialises in aged care advice go to www.agedcaresteps.com.au and click on the Find an Adviser link.
Mathematician develops tool to expose the true cost of retirement village living.
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