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What are the real costs of retirement village living

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Retirement village living can be a double-edged sword for many – with an often unexpected emotional and financial cost. The choice of retirement home may be freely yours to make, or you may be the one making the difficult decision to move a loved one into a suitable village. Whatever the scenario, there are costs and logistics involved and understanding them thoroughly will help minimise stress and additional strain on family finances. Unfortunately, the pricing structures and kinds of accommodation options vary so much, that it is almost impossible to give even ball park figures. This is a controversial topic as most Australian state Retirement Village Acts are outdated, with complicated legislation that most people find difficult to navigate.

The best approach is to first look for the facility that will meet the needs of the resident, create a shortlist of suitable facilities and then untangle those retirement village’s costs and obligations. The sheer choice of retirement living options, not to mention their cost structures, can be overwhelming and each individual has different needs and capacities. Ideally, the person moving in there can be cared for and offered living support, whilst also enjoying the personal freedom they need from day to day. The level of comfort and assistance should be considered in the decision - both in the immediate future and in the long term as care needs increase - as well as just how much that is going to cost.

For many families, the decision ultimately comes down to cost so the best approach is to shop around, take a look at a few different options and explore not only what the costs are, but what value you will get for that investment. If the fees seem to be going into fresh flowers, gourmet food and high-tech entertainment equipment but you can never find a staff member, then is this really the right solution? Conversely if the place is well staffed but run down with shabby carpets, poorly maintained grounds and the potential for safety issues, then is this really where your money is best spent? 

It’s likely you will be investing a considerable amount of money in the village of your choice, so don’t be afraid to get all the brochures, take tours and meet the staff until you feel convinced of your choice. Retirement village costs will vary from place to place but generally incoming residents will pay a deposit on application to reserve a place – this may or may not be refunded if you withdraw your reservation and go someplace else. Make sure you understand this before you reserve and pay. Depending on the tenure, residents may also pay an entry fee, or this may take the place of the deposit, depending on the operator. Interestingly, the word ‘vacate’ is used often in the contexts of an ‘exit fee’. This fee is charged when a resident ‘exists’ but what is rarely mentioned is that the exit is often because the resident sadly has died and families are rarely in a position to handle this situation straight away; financially or emotionally. So, make sure you understand and have allocated funds for an exit fee if one applies. Additionally, as waiting lists can be long, many families have had the arduous task of having to move their loved one’s belongings out of the facility within days of their death, so be sure to find out how many days ‘grace’ there are for ‘exit’, for when the time comes.

There are quite a few different options that fit under the term ‘retirement village’. They range from groups of ‘independent living’ apartments where residents come and go as they please, largely taking care of their own affairs, to assisted care facilities. These usually offer 24-hour staff, nutritional and medical support and facility care and maintenance on site, as well as recreation and leisure activities. The agreements for residency in these kinds of facilities also vary and in some cases, can get complicated to the point of confusion. The most secure option seems to be a lease arrangement where the resident will pay the deposit and then a lump sum for a set period. When the resident ‘vacates’ there will either be a refund or an outstanding amount to pay. A lot of retirement villages have ‘licence to occupy’ arrangements which are less secure in terms of the agreement itself and largely fund property developers whilst considerably devaluing the resident’s nest egg, once the resident ‘vacates’ and the balance of the licence fee is refunded. Again, the details vary from state to state so you should check local guidelines.   

Generally, people look in their local area first for a suitable village, or they may look for one that is closer to family who may previously have lived far away. Whatever the decision, it’s important that whoever is making it is fully aware of the expectations and obligations that come with residency. Good professional advice is also essential before signing any agreements for yourself or on behalf of family.

 

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DISCLAIMER

The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.

Tags: Selling, Downsizing, Retirement

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