If you’re thinking of moving into a retirement village, there are lots of things to weigh up – and money is one of the biggest considerations. You’ll likely have lots of questions, not just about how much it will cost to move in but how much it will cost on an ongoing basis, and when it comes time to leave.
We understand you need certainty about your financial future, and that you might feel concerned about affordability and hidden costs. Let’s walk through each step of the process so you know exactly what to expect.
Payments – how much, when, and will they change over time?
To increase financial certainty, we’ve made our contracts as clear and transparent as possible. We specify, upfront, which costs you’ll be liable for and what they cover. Here’s a quick breakdown of the fees you’ll need to pay over the duration of your stay in one of our villages:
Your entry payment gives you the right to reside in your new home. The good news is that this is typically 70-80% of the local median housing price, making your move into a village much more manageable.
Monthly service fees
Service fees typically range from $600-700 per month depending on which village you choose, and are set at a cost-recovery rate only. These cover our operating costs as well as:
- Council rates
- Water rates
- Building insurance
- Building maintenance
- 24 hour emergency call system
- Access to and upkeep of communal village facilities
Retirement village operators don’t profit from this fee, and you can rest assured that it can’t be increased greater than the Consumer Price Index without the approval of village residents. For further peace of mind, these fees are audited by an independent party each year.
Deferred management fee (DMF)
When it comes time to leave the village you’ll receive an exit entitlement, which equals the purchase price minus the DMF. The DMF itself is calculated on a sliding scale for your first three years in the village, starting at 10% of your entry payyment and capped at 35%.
By charging this on exit – rather than incorporating it into the purchase price – you’ll free up your cashflow and also find that your move into the village is much more affordable.
It’s important to note that the DMF is the only fee that allows the team at RetireAustralia to reinvest back into the village through capital replacement works and upgrades of communal facilities. This helps maintain value in resident’s homes, which is important when it comes time to sell.
What’s more, you’ll know the exact amount of DMF you’ll pay before you move in, making your future budgeting clear and predictable.
What do I get for my money?
Choosing to move into a retirement village is about far more than bricks and mortar. In reality, it’s an investment in your lifestyle. Not only will you be moving into a friendly community filled with people at the same stage of life, but you’ll have access to a range of amenities.
These vary depending on the village you choose but can include things like:
- Swimming pool
- Tennis court
- Bowling green
- Hair salon
- Community centre
- BBQ areas
- Resident’s bar
- Billiards room
You can also get involved in a range of interest groups, social activities and events from happy hour to mini-golf and more – it’s really up to you and the community.
What’s more, when you don’t need to worry about maintaining your house and garden, you’ll actually have time to explore new interests!
These intangible benefits are an important consideration, and should be weighed up alongside the financials. As the Retirement Living Council’s Book of Wise Moves points out, “the biggest mistake you can make in assessing whether the move is affordable is simply comparing the sale price of your current home with the purchase price of your new one.
“This only considers one part of the financial reality of entering a retirement village – and you should consider them all.
“To consider the decision solely on financial factors overlooks the amenity and social aspects of retirement village living.”
Cost of living comparison
A true cost of living comparison can only be obtained by spending time with a sales consultant in a village, talking through your circumstances and needs, and understanding the fees and inclusions in your chosen village. You also need to do your own homework and make sure you have an accurate picture of your current living expenses to make the comparison valid.
In a general sense, retirement villages offer great cost of living value but trying to put a specific dollar figure to this comparison can easily become misleading. Your own cost of living and those applicable to villages can vary substantially, so it’s best to check with your village of choice directly.
On top of the hard costs listed above which village fees cover, the costs associated with living in a retirement village also provide residents with a sense of community and belonging, support from friends and staff, and numerous opportunities to lead a happy, active and healthy life.