Retirement Living Made Simple! What’s the best option for you?
Retirement communities come in all different shapes and sizes and to help you consider your options we talk to Rachel Lane, co-author with Noel Whittaker, about what you should consider if you’re thinking of downsizing.
Are you best suited to apartment living? Would you want to move in with family (good for some, but not for all)? Or would you be better off at a retirement village or lifestyle estate – sometimes referred to as a ‘manufactured home park’ or ‘over-55s community’.
While no two retirement communities are ever exactly the same, let’s look at the three major differences between a retirement village and a lifestyle estate:
- the legal framework;
- the financial costs; and
- The ability to access Commonwealth Rental Assistance from the Government.
Legal Protection
On the surface it may appear there are too many different legal and financial arrangements that you need to compare. Most retirement communities fall into two groups: retirement villages or manufactured home parks (i.e. lifestyle parks).
Retirement villages operate under the Retirement Villages Act and the major differences are that in a Retirement Village you have a lease or ‘licence to occupy’. In a lifestyle estate however you own your home and lease the land. lifestyle estates also operate under state or territory legislation including the Residential Land Lease Communities Act, the Manufactured Homes (Residential Parks) Act and the Residential Tenancies Act.
Both retirement villages and lifestyle estates both typically offer a range of lifestyle and community facilities from swimming pools to community centres and lifestyle programs but a large point of difference is the cost structure.
Financial Costs
Properties sold under the Retirement Villages Act will have a range of costs to consider. The ingoing contribution (purchase price); the monthly maintenance fee; a deferred management fee (a percentage paid to the operator when you leave often between 20 per cent to 35 per cent); and a share of the capital gain that you also share with the operator of the village. The disclosure statement details these costs and allows you to compare between villages and other options you may be considering.
The simplicity of the costs in a lifestyle estate is the differentiating factor. When you choose your new home in a lifestyle estate you pay for the house and own it, you rent the land, and subject to your circumstances, you may qualify for the Commonwealth Rental Assistance to subsidise this land rent. There is no more to pay! It’s that simple! Your land rent (usually between $150 and $180 per week) covers all community facilities, maintenance costs, and your council rates and village management costs. All you have to budget for is your personal utilities, home and contents insurance and your next holiday!
Both retirement villages and lifestyle estates (MHEs) are governed by legislation that controls fees and rent increases.
Commonwealth Rent Assistance
There is a lot to consider when it comes to finances of moving to a retirement community. Common questions include: what will happen to my pension? Will I be eligible for rent assistance? Will I be able to afford living in village longer term? What will be the cost of a care package if I need one? And how much money will I get back when I leave?
Financial confusion is one of the reasons people delay moving to a retirement community. When they finally make the move their biggest regret is not moving sooner!
If you are confused about the financial implications of moving to a retirement community, seek advice from a financial adviser who specialises in this area.
About the author
Rachel Lane is the Principal of Village Gurus and co-author of the book ‘Aged Care, Who Cares?’ with Noel Whittaker. She overseas a national network of financial advisers dedicated to providing quality advise to senior Australians and their families. Rachel has specialised in this field for more than a decade and believes her passion comes from growing up with her grandmother. Rachel also holds a Masters in Financial Planning.