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The financial fishhooks of moving into a retirement village were scrutinised at a public meeting in Warkworth last month.
Commission for Financial Capability (CFFC) national manager Troy Churton told attendees that it is important for retirees to take the time to consider their options.
Switching between retirement villages is difficult because the equity in a unit is typically only paid back once new occupants have been found, which can take anything from months to a year.
During that time, the operator can continue to charge weekly maintenance fees, although they must be halved after six months.
“In financial terms, the ideal situation is to leave a retirement village in a coffin,” Mr Churton said.
“Take a look around the common areas at a village and see the dynamic of the community. You will age with these people.”
He said if a village had a residents’ association, it was usually a good sign that it had a vibrant community.
“Don’t just talk to a mate about the village – ask the residents’ association, because they are at the coalface with management. If you don’t have an assertive personality, they can be an ally.”
Mr Churton said another important aspect to consider was the pathway to a medical care facility, in case of being struck by long term or permanent illness.
“The perception that a retirement village is a care facility is wrong. Around half of villages do have care beds, but there can be major waitlists, so it is important to ask about that up front.”
Standard care rooms may be covered by a subsidy but some retirement villages only provide premium rooms, which can come with a further daily charge of $20 to $100.
If a resident elects a standard room, then the operator would be obligated to look for one within a 10km radius, but if nothing is available, then a facility further afield would have to be found and the right-to-occupy contract for the village apartment would be terminated.
However, if a spouse or partner still resided in the retirement village, then the couple may find themselves paying for both the village unit and the care facility, in addition to having to travel for visits.
Another important point to establish at the outset of an agreement between a resident and an operator is what might happen if new love springs forth.
“Relationships do begin and end in retirement villages. There is a singles market and it favours the lucky blokes because there are fewer of them than women,” Mr Churton said.
He said eventually an operator might ask newly coupled-up residents to review the terms of their contract.
If a new licence is established, the operator could theoretically take a 20-30 per cent fee from the equity of the unit.
Mr Churton added that though retirees needed to be savvy about their choice of village, overwhelmingly residents found them to be a positive experience.
The CFFC is a Crown entity that monitors the retirement village industry and provides information on the financial implications of moving into a village.
