We’ve all seen the ads on TV and in magazines
of happy-looking seniors enjoying a game of lawn bowls in their retirement village.
It looks like a great way to spend your golden years if you want to spend less time looking after your house and yard. And because you are surrounded by people your own age, there’s no chance of music blaring from next door at 1am.
Some villages may offer serviced apartments where meals, laundry and cleaning are provided for a fee, and you can also use government-subsidised home care packages and services.
Sounds good? It can be. But you must understand there are four main types of fees that you face – pre-entry, entry, ongoing and exit.
The fees may depend on the contract type and the specific details of that contract. Remember, the government does not regulate the fees or control how much the village operator can charge and does not subsidise your costs.
You need to be able to afford the costs on your own and you also need to ensure that any fees or loss of capital are worthwhile as ‘an expense’ for the benefits you want to access from a retirement-village lifestyle.
Generally, paying to move into a retirement village should not be seen as an investment as it’s not unusual to get back less than you paid. You are paying
for a lifestyle.
This is why it’s important to read the contracts carefully and get legal advice to make sure you understand the full fee structure. You should also seek financial advice to make sure you can afford to make the move, including whether you can afford to then move out when needed.
If you run out of money, you generally cannot use a reverse mortgage or other loan arrangement to access your equity.
Deciding if a retirement village is right for you
This is a very personal choice and it’s a lifestyle decision. Some people love the idea of living in
a retirement community, while others don’t. You need to think about your own preferences, situation, interests, financial capacity and health.
On the plus side, you have people of a similar age group.
The facilities are usually targeted to the needs of people in the village.
Clubs and social activities are often well organised and can be low cost, thanks to the economies of scale.
Many people miss the diversification of a normal community. The sound of kids playing and life in general is often lost once you move into a village.
Equally, some villages develop cliques and factions or you may end up living next to someone you don’t like. While no different to life in the real world, village life may restrict your ability to change things.
Checklist to consider
This is a quick checklist of actions if you are thinking about moving into a retirement village:
Shop around and compare villages.
Decide on where you want to live and the style of accommodation.
List what services are important to you and what are just nice to have.
Check if the village provides access to aged care in case you need to make that move in the future.
Read the contract – and seek legal advice.
Work out how much you can spend.
Understand the fees to move in, ongoing and when you leave and decide if it is affordable.
Doing your research
Research on retirement villages might involve reviewing documents and understanding complex concepts, but it is an important step.
There are a number of websites that you can use to do research on what retirement villages are available. Many
state governments have seniors housing agencies, which may provide information and assistance in making the correct choice.
Ask the village operator lots of questions and do internet searches to broaden your understanding of retirement villages, including the traps and your rights.
Ideally, speak to existing residents of any villages you
are interested in and find out what they think. Be wary of advocates put up by the village operators.
When doing your research, ask the village operator for copies of documents including:
The contract and service agreements.
A site plan and floor plans for the residences.
Village rules.
Accounts and budgets for the last few years as well as the most recent quarterly accounts.
Company constitution if
a company contract or strata records if a strata scheme.
Details of any legal proceedings or actions involving the operator or residents in recent years including the decisions and results.
Insurance policies (including public liability) and the recent safety report.
Development consents, if still under construction.
WHAT YOU NEED TO KNOW ABOUT GRANNY FLATS
Your kids have invited you to come and live with them. Sounds like a great idea?
You could even give them large amounts of money to cover any expenses or just to say thanks and you might get a pension bump. Sounding even better?
What could go wrong? You’re family, right?
Most people think of a granny flat as a small apartment in the backyard of one of the kids’ home.
The government sees a ‘granny flat arrangement’ as a number of situations where the parent gives money to a child in exchange for the lifetime right to live with that child or in a home that the child owns.
Centrelink treats money given to children for a granny flat differently to other cash gifts, which have the potential to affect your age pension payment.
The following three scenarios are common and don’t trigger Centrelink gifting limits:
The child spends money to build or modify their home so you can live with them and you reimburse them for this expense.
You buy the child a house and they give you the lifetime right to live in that house or another house they own.
You transfer the title of your home to your child and they give you the lifetime right to keep living in the home or another house that they own.
What are the benefits of granny flats?
Living with the kids is an obvious way of downsizing. You have built-in carers and company. They get a live-in babysitting service. It can have two-way benefits.
If you meet the eligibility requirements, you can still
access support from the Commonwealth Home Support Program or Home Care Packages which may take some of the burden off your family
and give you a bit more independence.
Just because you live close to the family, doesn’t mean they need to be your carer.
What are the risks?
Before jumping into a granny-flat arrangement, think carefully about the legal issues and family relationship implications.
We all like to think that blood is thicker than water, but an ageing parent presents particular challenges for families.
Granny flat arrangements often involve handing over large sums of money to one child, so think through what would happen if your child:
Gets divorced and needs to split assets with their ex-spouse.
Becomes bankrupt.
Has a gambling or other addiction.
Becomes intolerably annoying and you change your mind.
Asks you to leave.
Isn’t your only kid and you want to leave a fair inheritance to others.
A carefully constructed legal document setting out the terms of the arrangement and what happens if things go pear-shaped might resolve some issues.
But if the relationship turns really sour, getting your money back might mean taking legal action. Suing your own children does not make for a relaxed retirement.
- This story was edited from Don’t Panic – Age the Way You Want, Where You Want by Louise Biti and Nick Bruining, RRP $29.95, thewest.com.au/dontpanic or 1800 811 855.
Related stories
Native ad body.
Native ad body.
Native ad body.
