Tuesday, August 9, 2016

Cost to live in a retirement village

Tips for choosing a retirement village

Don’t rush it! We’re more likely to choose the right retirement village if we don't make a quick decision:

  • Think ahead and consider what we might need in the future – will we be able to continue to live there if our health or mobility declines?
  • Imagine the ideal lifestyle in a retirement village, and make a list of the things that are most important.
  • Visit different villages and find out about the lifestyles they offer, including housing options, facilities and services.
  • Talk to the residents – they know better than anyone what life is like in the village they live in.
  • Take time to read the documentation associated with buying into, living and leaving the village, including the disclosure statement and occupation right agreement.
  • Find out the total costs. How much is payable on entry? What are the ongoing expenses? Will we share in any capital gain when we leave? Will we have to pay for any capital loss? How will these affect our future and the choices we have?
  • Get independent financial advice from a financial planner or accountant with experience in retirement villages.
  • Get independent legal advice from a lawyer with experience in retirement villages. Ask them about the different legal titles and what they mean.
  • Involve family or friends in the decision.

Fees & Charges

Entering retirement can often enable you to get into a new home that is suited to your lifestyle at an affordable price.

A unique advantage of retirement village living is, in many cases, the ability to defer a large part of the cost until after you leave a village, which for most people is well after they have a need for significant financial resources.  This is a major benefit of retirement living.

There are many different models and, as with any decision of this type, you should consult your financial advisor, accountant or lawyer before making any decision so as to ensure you fully understand the costs and structure of any agreement entered into. Involving your family in the decision is also a good idea.

To be sure that retirement living is for you, it’s very important to be clear about your current financial circumstances.

You need to be aware of three different types of costs before deciding to live in a retirement village. These include:

  • The entry fee or purchase price
  • The service or maintenance fees
  • The exit fee, also known as a departure fee or deferred management fee.

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