What retirement living options are there?

Planning ahead for retirement is an exciting time. Looking ahead, you’re probably thinking about having the time to do all those sports, activities and hobbies that had to take a back seat to work and raising a family.

And unless your hobbies are landscaping, pool maintenance, house clearing and repairs, you might well be thinking about downsizing to a new home which is low maintenance and close to everything important to you.

You might be surprised to know that there are different residential options for retirees and the right choice will depend on your circumstances.

What is a retirement village?

Retirement villages can either be run by for-profit companies or not-for-profit organisations and charities. They range in scope from independent living units such as a duplex, through to apartments or hostel-style properties with shared facilities.

They are designed for older retirees who may feel the need for additional social or medical support and can be near more advanced medical support services.

Pros

One of the benefits of downsizing in retirement is finding friends of similar ages with the same interests. Many retirement villages offer communal meeting spaces to encourage socialising, however the facilities on offer might be limited to more sedentary pursuits without active living facilities such as a gym, tennis and pickleball courts, for instance.

Some retirement villages may run activities and events for residents and may also offer in-home support services and be co-located with nursing homes.

Cons

Retirement villages are managed by the owners – and that may not be you. Some retirement villages operate under a ‘loan and license agreement’ where you ‘buy’ into your home but not own it. You only lease the home for a set term.

Should you decide to leave, there are a number of fees to consider such as deferred management fees, exit fees, capital gain fees and maintenance fees, which will affect how much you’ll receive on the sale of your home.

While having someone organising activities and events might sound appealing, you might find it comes with restrictions on how you want to live your life such as limitations on whether you can host family gatherings, having the grandchildren spend a few nights or even whether or not you can have pets.

Aged care facilities

Aged care facilities are designed for older people who need more physical or nursing support. Like retirement villages you may have to pay a large entry fee and pay on-going service charges.

Pros

Aged care facilities provide an important service for older Australians with complex care needs by offering nursing and personal care services along with social activities that meet the needs of those who are elderly and infirm.

Cons

This type of retirement living is not suitable for healthy and active over-50s who value their independence.

Rental retirement villages

These are less common than retirement villages in which residents own their home (or lease it under a loan and license agreement).

Pros

Often run by charities, these rental retirement villages have been developed for older people who do not have their own home and have fewer financial resources than other over 50s.

Cons

Because of their scarcity, this senior living option may not be in an area you prefer to live in. You might also be required to have a flatmate as part of the agreement. These low-cost facilities often have very basic social amenities such as a garden and barbecue area.

Land Lease Communities/Lifestyle resorts

Land Lease Communities – sometimes known as over-50s lifestyle resorts – offers older Australians the option to own their own home while enjoying resort-style facilities.

Homeowners purchase the home and ‘rent’ the land that it is on. The weekly site rental fee covers council rates as well as the maintenance of the resort facilities and common areas.

Pros

Owning your own home is a big tick in the win column. These resorts are run by homeowners’ committees rather than the park owner which means you get a say in the events and activities that take place.

Another benefit is enjoying a better and more expansive range of active living facilities that better suit independent over 50s. These include a gym, swimming pool, tennis and pickleball courts, lawn bowls and ten-pin bowling.

There are no complex contracts or hidden fees, which makes it easier to budget. You own your home and pay a modest weekly site rental. There are no deferred management fees, exit fees, or capital gains fees, which creates more certainty should you want to leave a legacy or fund ongoing care.

Cons

As mentioned above, land lease communities mean you don’t own the land your home is on, but it’s important to note that your right to occupy the site is guaranteed by state government legislation.

In addition, there is no stamp duty to pay on your purchase and, if you hold an Australian aged pension or Department of Veterans’ Affairs cards, you may qualify for government rental assistance that reduces the costs of the weekly site fee.