Throughout our lives we make choices about where to live, largely driven by lifestyle, work or family. However, as we get older, our health or increasing levels of frailty may have a greater impact on these choices and our ability to live independently. Where we live is not just a decision about physical location but how we can access our community, appropriate levels of care and support services.
It’s also important to understand what is affordable in retirement as well as how the daily routine of retirement living can be managed.
Retirement villages versus residential care
Retirement villages offer the opportunity to live independently in a community of people in a similar stage of life. The retirement village operators will maintain the external building and community garden areas, but it is still independent living. For an additional cost, residents may be able to access aged care support services inside their home, but services vary from one retirement village to the next, and unless provided through a Home Care package, costs are not subsidised by the Government.
Residential aged care bundles fully supported retirement living and care together with residential accommodation. This care is provided 24/7 and the costs are heavily subsidised by the government.
The table below provides a basic summary of some of the key comparisons between retirement villages and other forms of aged care.
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Retirement village |
Residential care |
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Entry cost (accommodation) |
Set by the operator and specified in the contract. Usually a lump sum “purchase” but some villages may allow a rental arrangement. |
A published price which you can choose to pay as a fully refundable lump sum or a daily “rental” amount. |
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Tenancy right |
Occupancy usually under a lease or licence arrangement. |
Permanent tenancy for life, with rules for future moves specified in the agreement. |
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Centrelink /DVA means-test
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Homeowner status depends on the amount paid. If determined to be a homeowner, the entry amount paid is exempt. |
If a homeowner before moving, this status continues while a spouse continues to live there, or otherwise for the first two years only (or until home is sold). |
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Options when leave |
Depends on contract. If the unit is sold you may or may not share in any capital gains. A deferred management fee and refurbishment expenses are generally deducted from the refunded amount. |
A lump sum paid for the room (less any fees deducted) is refunded. All other rights terminate. |
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Cost of care |
Optional services provided at the operator’s discretion – with commercial and non-subsidised pricing. |
Rules for calculating fees are set by the government based on means-testing, with minimum and maximum annual fees. |
Accommodation versus aged care
When aged care is needed, many people compare the option of a retirement village against residential aged care. While both provide supportive community environments and the opportunity for continued independent living, they are not complete substitutes. The funding and care implications are quite different, as are the range of service providers available at these communities.
Don’t view the comparison as just a property transaction based on price and size.
For example, in a retirement village you may have access to whole apartments or villas, while for a similar price in a residential aged care service, you have only a single room.
One should also think about how much support they need on a day-to-day basis.
The value of retirement advice
Finding the right retirement living approach in Australia can be confusing, difficult and stressful for you and your family. Emotions always run high when major life changes are involved, particularly when the costs and quality of lifestyle are an unknown.
Giving family members time to properly consider all the retirement options by starting the research early can reduce stress levels, and ensure the maximum retirement living options are available when it comes time to act. For an older person, this can also ensure their voice, and choice of living facilities, is heard more clearly.
If you enjoyed this reading and want to know more about your options, please email or call us – [email protected] or 02 8016 3200.