Many people know someone who has moved into a retirement village and wonder whether it might be a good idea for them too. It is quite a personal choice and will depend a lot on your own situation, interests and financial position. What some people might consider advantages (for example, more companionship and people around or someone else doing the outside maintenance) might not suit other people.
About retirement villages
Retirement villages generally accommodate people, both singles and couples, aged over 55. Residents may be in excellent health or may require assistance in daily living. Retirement villages are popular with people who feel they need more security, support or company but who want to maintain their independence.
Kinds of accommodation
Many villages only offer self-care units for people who can look after themselves. Some villages also offer serviced units, which usually means you can have meals, house-cleaning, laundry and some personal care provided.
Some complexes include both retirement villages and aged care homes, which may include low level care and (sometimes) high level care.
Self-care units
Self-care units:
- suit people who do not want to look after a large home or who want the lifestyle or other facilities offered by the retirement village
- are similar to normal home units, usually one or two bedrooms
- have fully self-contained facilities, including a kitchen to prepare meals
- may offer meals and personal care (normally at extra cost) in villages that also contain serviced units or residential aged care accommodation.
Serviced units
Serviced units:
- may not contain facilities to prepare full meals—people generally eat in a communal dining room or have meals delivered to their units
- may provide help with cleaning and maintaining the unit and with personal care.
Serviced units are not classed as low level care (hostels) unless they receive Australian Government funding. Where government funding is provided for places in serviced units, only people assessed by an Aged Care Assessment Team (ACAT) as needing residential aged care can move into these serviced units.
Links with residential aged care homes
- As noted above, some villages contain government-funded aged care accommodation. Residents who are assessed by an ACAT as needing residential aged care may be able to move to low or high level care accommodation in the same village, either directly from their family home or from a self-care or serviced unit in the retirement village.
- Residents who move into low level care may have to pay an accommodation bond as well as fees for their care. For information about accommodation bonds see in the 'Accommodation bonds' section and for information about care fees see in the 'Residential daily fees' section.
- Residents who move into high level care may have to pay an accommodation charge as well as fees for their care. For information about accommodation charges see in the 'Accommodation charges' section and for information about care fees see in the 'Residential daily fees' section.
- Residents who move into high level care on an extra service basis pay an accommodation bond rather than an accommodation charge.
Services provided
There is no set list of the services provided in self-care or serviced units. This is different from the situation in aged care homes. For a description of the services that are provided in aged care homes see in the
'Eligibility for entry to aged care' section.
Most villages have an administrator or manager (perhaps part-time in smaller villages) and someone to look after the gardens. Other services may include emergency call services, personal care or nursing assistance, hairdressing services, delivery of meals or a community transport service. Some villages cater for people speaking languages other than English.
If you are considering moving into a retirement village, you need to work out which services are most important to you and look for a village where all or most of these are available.
[
top ]
How are retirement villages funded?
Retirement villages are funded by residents' payments, loans or donations (also known as entry contributions) and by ongoing fees and charges. These payments are not set by the government but by the agreement between the resident and the operator of the retirement village.
Entry contributions
Before you move into a village, you will nearly always need to pay an entry contribution. The amount of entry contribution you have to pay may vary according to the village you choose and the kind of accommodation you require. In some villages, the entry contribution is equivalent to the actual purchase price (market value) of a unit. In other villages it is much less.
You will not need to pay an entry contribution if you move directly into an Australian Government-subsidised aged care place within the village. For information on costs you may have to pay in this situation see in the
'Working out the cost' section.
Ongoing service charges
You will also need to pay ongoing fees and charges for services and facilities. If you are living in a self-care unit or serviced unit, these fees are set by the retirement village. There is no government legislation that sets these fees, so it is important to be sure you understand what you will have to pay. Remember, there may be extra charges for optional services like laundry, which you might want to use later on.
Some villages also offer rental places to people who do not own a home and have only a few assets, and are thus not able to pay an entry contribution. In this case, rental costs are also set by the retirement village.
What are the forms of tenure in retirement villages?
Forms of tenure vary around Australia. The most common forms of tenure are loan and licence and leasehold. Strata title and company share are less common forms. While some of these forms of tenure confirm rights of ownership, all of them protect tenants' rights. You should seek legal advice on the effect of the form of tenure which would apply to you and which should be specified in the contract.
What to consider before you move into a village
Some of the issues you need to consider if you are thinking of moving into a retirement village are similar to those you would take into account if you were thinking of moving from your family home to, say, a smaller and more modern house or townhouse. For discussion of some of these issues see in the
'Moving to a more suitable home' section.
There are extra things to think about if you are considering a move to a retirement village. Some of these are about the lifestyle—you may be living in closer proximity to other people than you are used to or there may be restrictions on pets or visitors. Others relate to location—the public transport options and access to general community activities may be limited.
It is important to look around at a number of villages that might meet your requirements. If you are very interested in a particular village, try to visit it several times before you make a decision. You can approach retirement villages directly and deal with the management in relation to any proposed decision to move in. However, particularly when you are considering buying a strata title unit in a retirement village, you can also deal with a real estate agent who may be acting on behalf of a resident who would like to sell.
It is also particularly important to understand the contract you would be asked to sign, and the potential costs to you now and later.
Seeking expert advice
You may want to discuss your situation with family and friends (including any who have already moved into a retirement village). It is important that you also seek expert legal advice. In particular, you should get a solicitor's opinion on the contract before you sign it.
Choose a solicitor who is familiar with retirement village contracts and the Retirement Village Code of Practice. The solicitor should have a good knowledge of the retirement village legislation in the state or territory you would be living in. Typically, the legislation sets clear standards for the management and ownership of retirement villages, disclosure of details about the village, and supplying clear explanations of how the finances are run. It may also ensure the way the village is set up and operates cannot be changed without the approval of residents. The legislation also covers what is included in residency agreements—for example, cooling-off periods, residents' financial interests, dispute resolution procedures, and residents' rights to a voice in management.
Understanding financial arrangements, services and fees
- Before you sign a contract, make sure you are aware of all the fees and charges, and the circumstances under which they could be increased.
- Check how much of your entry contribution and any capital growth in the value of the unit you occupy will be refunded if you leave the village.
- Check how long you would need to wait for the refund. At a later stage you might need money to pay an accommodation payment to an aged care home.
[
top ]
Centrelink and Department of Veterans' Affairs assessment
Your entry contribution
As explained above, most villages require you to contribute an amount of money, known as an entry contribution, to them before you move in. In assessing your entry contribution, Centrelink and Department of Veterans' Affairs (DVA) consider that it includes all amounts that you must pay when you move into the retirement village. Centrelink and DVA do not include ongoing fees and charges for services and facilities in the amount assessed as your entry contribution.
How much you pay affects Centrelink's and DVA's assessment
The amount of entry contribution that you pay affects:
- whether Centrelink or DVA considers you to be a home owner
- whether you will be eligible to receive Rent Assistance. For more information on Rent Assistance see in the 'Rent Assistance' section.
Centrelink and DVA compares the amount of entry contribution you pay against a figure called the extra allowable amount. This figure is the difference between the non-home owner and home owner assets test thresholds at the time the entry contribution is paid. For more information about the assets test see in the
'Assets test' section. The extra allowable amount is $124,500 at December 2008. If your entry contribution is above the extra allowable amount, you are considered to be a home owner. If your entry contribution is less than the extra allowable amount, you are considered to be a non-home owner. You can find out what the current extra allowable amount is by calling Centrelink on 13 2300 or visiting the
Centrelink website (www.centrelink.gov.au).
Whether you are considered to be a home owner affects the amount of assets you can own without affecting your pension entitlement. For more information about the assets test see in the
'Assets test' section.
- If you are not considered to be a home owner, your entry contribution is included as an asset. It is not classed as a financial investment and income will not be deemed. For more information about deeming see in the 'How deeming works' section. You have a higher threshold before your assets can affect your pension, compared with someone considered to be a home owner.
- If you are considered to be a home owner, your entry contribution is not included under the assets test nor is it classed as a financial investment.
What if you did not sell your home before you moved into a retirement village?
Generally your former home is treated as an asset, unless your partner is there. If you rent out your former home, the rent you receive counts as income.
Amount of pension paid to pensioner couples
Self-care or serviced units
If you and your partner live together in a self-care unit or serviced unit of a retirement village, you will be paid pension at the partnered rate.
Aged care accommodation
Couples both of whom have been assessed by an ACAT as needing residential aged care and living in government-funded age care accommodation within a retirement village complex may be eligible for payment at the higher illness-separated rate. For more information about couples separated by illness see in the
'Couples separated by illness' section. .
What to tell Centrelink or the Department of Veterans' Affairs
You may be eligible for more pension or Rent Assistance if you move into a retirement village, if you paid less than the extra allowable amount to enter the village. Tell Centrelink or DVA as soon as possible because they can only pay you more from the time you tell them that you have moved. You can call Centrelink on 13 2300 or visit the
Centrelink website (www.centrelink.gov.au). You can call DVA on 13 3254 or visit the
DVA website (www.dva.gov.au).