Making your next move

Retirement lifestyles come in a baffling range of choice. JULIE LAKE wades through the detail and investigates just two of the options. ‘Where do we go from here?’ is the big question asked by many of today’s retirees, because never before have so many retirement living options been available.

The first of our superannuation-rich Baby Boomers reach 70 next year and are looking to reward themselves by spending their sunset years having fun.

A significant number of them will decide that retirement enjoyment is best found by downsizing to a purpose-designed community where the livin’ is easy and all the hard yakka of home maintenance is someone else’s responsibility.

Some of these retirement communities are very luxurious indeed, catering to bowlers, golfers and boaties and offering everything from ballrooms and cinemas to restaurants and beauty salons. Swimming pools are a standard feature, often with spas and saunas attached.

Today, retirement living is not just an enticing alternative to staying in your family home, it’s Big Business, with major property developers and investment companies competing for both the retiree and the investor dollar. Moreover, the retirement village industry is the highest scoring industry in Australia in terms of customer satisfaction.*

There are eight different legal structures covering senior living communities that market themselves either as retirement villages or Over 50s/55s leisure/resort villages so for now, we will concern ourselves with only two.

These are the freehold strata/community title complexes and the officially-designated leasehold retirement villages in which residents contract for the right to reside but do not own the land on which their home stands.

The term “retirement” can be misleading because many of the residents, especially those in their 50s and 60s, are still working. Typically, a freehold age-restricted village will have a caretaker/groundsman and a body corporate manager to handle specialised corporate matters such as levy collection, investment of the capital replacement fund and any serious by-law breaches.

A residents committee deals with day-to-day community, maintenance and financial issues.

Depending on size, the village may offer amenities such as a swimming pool and community centre plus organised social activities.

Resales are handled by outside agencies and all capital gains are kept by the individual home owners.

By contrast a “retirement village” as designated under the 1999 Retirement Villages Act, is a scheme whereby a person enters into a residence contract and for the payment of an ingoing contribution (plus weekly fees) acquires the right to reside there.

There are 119 registered retirement villages in Brisbane and on the Sunshine and Gold Coasts, considerably outnumbering the freehold strata/community title developments.

They differ widely in terms of tenure, costs (both ingoing and ongoing) and, of course, facilities and amenities. They fall basically into two types, those that are run for profit and those that are not.

The latter – today much the smaller group – are usually run by churches, ethnic communities and secular organisations such as Freemasons. These tend to focus more on aged care than on lifestyle.

The for-profit villages are run by owner-operators ranging from small locally-based companies to large international corporations such as Lend Lease.

Their main offer to residents is a seductively easy and even glamorous, lifestyle for a comparatively low cost as an alternative to capital investment in your own freehold home.

But behind the glossy brochures and websites featuring pictures of glowingly youthful retirees, it pays to read the small print.

The comparatively low cost of the homes may mean high exit costs and no capital gain if you move on – like the Hotel California, you can check in any time you like but you can never leave!

Financial advisers and seniors organisations counsel those planning to move into a retirement village to first have the contract scrutinised by a solicitor with specialised knowledge about retirement communities.

You should also check out:

• Tenure and leasing details

• Deferred management fee (aka exit fee) – deducted from the re-sale of your property if you leave the village and usually a calculated percentage of the value multiplied by the years you’ve lived there.

• Capital gains (how much kept by you when re-selling, how much by the owner-operator)

• Annual levies/weekly fees (government-regulated to CPI increase but extra costs may occur)

• Quality of maintenance of grounds, homes and community amenities

• Financial history of the complex (this applies equally to freehold strata/community title estates - all senior living complexes, whatever their title structure must maintain an adequate Capital Replacement Fund, regularly audited by a quantity surveyor and it’s worth remembering that, as all costs are ultimately carried by the residents, the more amenities you have, the more you pay)

• Quality and cost of ongoing care (many of the larger complexes offer graduated care from independent villas to serviced apartments to nursing homes and this is can be an important consideration when choosing a retirement village)

• Registration and accreditation (all reputable retirement villages are registered and some are now accredited under the RVA scheme)

• Community Management Statements governing pet ownership, parking, visitors, external home modifications and all aspects of community living.

It’s also advisable to check out the financial and management performance of the operating company via its annual reports, which are usually available on-line. Surveys show that most retirement villages offer excellent value and according to a national census report* a whopping 75 per cent of those who chose this lifestyle would do so again.

As one happy resident says: “It’s like being on holiday forever!” *The McCrindle Baynes Villages Census Report 2013 at villages.com.au

 Useful websites 
Choosing a retirement community to suit individual needs and pockets can be confusing because of the wide choice on offer. Fortunately there is plenty of good advice available to help you make the right decision. One essential document is The Retirement Village Handbook available at iseniority.com.au, a website that offers a lot of useful information.

Other important websites are:
villages.com.au, retirementliving.org.au, mccrindle.com.au.

For a more cautionary view of retirement village living you might like to visit bmartin.cc/dissent/documents/health/retirevillages.html