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.
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.