The growth in retirement villages has been impressive over the last 50 years. Before considering moving into a retirement village it’s important to understand the initial and ongoing financial implications.
We have a human need to be part of a community and continue to connect with people for as long as we can. Retirement living options, including retirement villages, allow us to continue to be apart of a community as we age gracefully. They provide an alternative to continuing to reside in the family home.
When considering a retirement village it’s important to understand what you are signing up for. There are many providers in Australia that have different financial models around how they charge.
Many providers charge a deferred management fee (DMF). This is basically a percentage of the purchase price each year, deducted when you sell the property. Deferred management fees are usually capped and can range between 30% to 40% of the initial purchase price. Some providers don’t charge a DMF however you need to understand what you are getting for your money before making a final decision.
On-going chargers usual apply when moving into a retirement community. Normally charged weekly, fortnightly or monthly, the on-going charge is designed to cover some of the operating expenses of the village.
It’s also important to consider future homecare or aged care needs that can be factored into the cost of residing in a retirement community.
Consumers can access a variety of retirement planning services to compare their options before making a final decision. A strategy document which shows the impact on the estate, cash-flow, aged pension and other entitlements is important in the decision making process.
