Financial Care Services Newsletter
by Christine Hopper
Volume 14 Edition 11 – 30 November 2024
Christine at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles
Lifestyle community retirement village living
Moving to a lifestyle community retirement village is an opportunity for a new lifestyle.
The marketers profile relaxed senior couples enjoying elegant social spaces.
In practice, the major attractions of lifestyle community retirement village living are being part of a safe, active community whilst supported by an on-site manager to deal with garden and building maintenance, and problematic neighbours.
But what are the costs of living in a lifestyle community retirement village?
What a lifestyle community retirement village property looks like?
Your lifestyle community accommodation might look like a six-story apartment building with individual balconies and an underground carpark.
An older lifestyle community could consist of rows or clusters, of villas together with a community centre building within an enclosed garden setting.
The essential feature of a lifestyle community retirement village is that long term residents must have attained their senior years and individually agreed to contribute to the costs of the communal facilities provided by the retirement village owner/manager.
The communal facilities could just be a very basic community meeting room plus internal roads, footpaths and lawns, established and maintained by the owner/manager.
A new inner suburban lifestyle community building could incorporate a fully equipped gymnasium, heated swimming pool, library, theatre, lounge and outdoor barbeque facilities for residents use at no additional cost.
Most lifestyle community retirement villages would have a medical consulting room and beauty salon for use by visiting practitioners.
What do you pay upfront to move into an independent living unit within a lifestyle community retirement village?
The upfront ingoing payment for an independent living unit lifestyle community retirement village could be similar to the purchase price of an apartment or independent living villa unit in the surrounding area.
But the ingoing payment for an independent living unit within a lifestyle community or retirement village usually buys the ‘right to occupy’ the unit subject to the many other clauses in the resident agreement.
These agreements could be ‘lend lease deals’: the incoming resident lends the ‘ingoing payment’ to the owner/manager in exchange for a lease on the independent living unit.
A minority of lifestyle community or retirement village units are offered for rental without a substantial bond deposit or for strata style purchase.
What services would be available to residents of a lifestyle community retirement village?
Firstly, a community manager would be on-site during ordinary business hours.
The basic duty of the manager would be ensuring that the garbage collection, garden maintenance and interior cleaning of the communal facilities was accomplished without disturbing the residents’ quiet enjoyment of their homes.
The manager would be available to rectify any problems with communal facilities both maintenance and weather induced damage.
Additionally, dealing sensitively with misunderstandings among residents, difficult neighbours and the families of frailer residents would be part of the manager’s duties.
Secondly, residents of a lifestyle community would expect some lifestyle enhancing and community strengthening activities to be provided within their community centre.
No additional charges would be levied for weekly social events and health maintenance classes.
The regular village bus schedule would ensure that residents could access shops and recreational centres without additional costs.
Visiting medical practitioners, therapists and hairdressers could use the relevant community rooms without incurring hire fees.
The frequency and style of social and supportive activities provided varies.
The large multi storied apartment building type of lifestyle community could include extensive recreational facilities.
Gyms and swimming pools are expensive to install and maintain.
Elegant lounges, private dining room, libraries and theatres occupy space that could otherwise be used for more apartments.
A community centre with a large meeting room and a medical consulting room might be the only communal facility within an older suburban retirement village.
Thirdly, residents would expect emergency call bells to be installed in bedrooms and bathrooms of independent living units.
Emergency call bells are expected to be answered promptly by on-site staff during office hours and/or ambulance services at other times.
In summary, lifestyle community retirement village is expected to provide a safe, secure and stimulating home free from the challenges of home maintenance.
What are the ongoing charges for the lifestyle community retirement village?
Utility bills will keep arriving both for your usage within your independent living unit and for the communal facilities of the lifestyle community retirement village.
You will need to pay your own phone, electricity and maybe gas and internet, costs each month.
Then you need to pay your share of the utility bills, insurance premiums and land ownership charges for the whole lifestyle community retirement village.
The owner/manager needs to collect enough from the residents’ monthly service fees to cover all of the regular outgoings for the property.
In addition to the utility bills, the monthly service fee must cover the wages and contractor fees for operating the lifestyle community retirement village.
The gardener, the cleaners, the on-site manager, the garbage removal contractor and the emergency call responder all need to be paid every month.
A substantial monthly service fee is usually required to cover the regular bills for operating the lifestyle community retirement village.
The owner/manager is usually permitted to increase the monthly service fees annually in line with movements in the Consumer Price Index without consulting the residents.
Further increases in the monthly service fees are allowed, after discussion with the residents, to reflect changes in the package of amenities and services to residents.
Who pays for buying the land, setting up the lifestyle community retirement village and then refurbishing the buildings and major equipment?
The residents of the lifestyle community retirement village each contribute to the set up costs and major refurbishments of the places where they experienced the seniors lifestyle.
Residents could be required to contribute to the establishment and refurbishment costs via an additional component of the monthly service fee.
But the level of service fee required to cover the regular outgoings of the lifestyle community retirement village could already be substantial.
If another substantial component were added to cover the establishment and refurbishment costs, then seniors might decide that lifestyle community retirement village living is too expensive.
Hence the deferment of charges for a reasonable share of establishment and refurbishment costs until their eventual deduction from the capital repayment when the resident has departed the lifestyle community retirement village.
When does your money come back after leaving the lifestyle community retirement village?
Nothing is refunded on the day that you leave the lifestyle community retirement village.
Once you have vacated your independent living unit or apartment, and removed all of your possessions then the unit is prepared for resale.
The internal walls are usually repainted and the carpets replaced whenever an independent living unit is permanently vacated.
This refreshment is undertaken Irrespective of how many years or months, that you occupied the unit.
An extensive renovation of the unit might be required after a long-term resident departs.
The unit might need updating to comply with the latest State government standards for seniors accommodation.
For example, in Victoria, an accommodation unit designed to house more than one senior person must have two toilets.
Thus, a major renovation of bathrooms is not unusual.
Kitchens could also require renovation to appeal to the next generation of lifestyle community retirement village entrants.
Once the renovations and refurbishments are complete, the independent living unit could be offered to potential new entrants to the lifestyle community retirement village.
Eventually a new resident takes over your former independent living unit as their home.
Then the new resident takes over the payment of the monthly service fee.
Finally, the outgoing resident, or their estate, is paid their exit amount.
This process could be compressed to six months from when the independent living unit was vacated, if the former lifestyle community retirement village resident is entering Commonwealth regulated permanent residential aged care.
State retirement villages laws specify the time allowed for all exit payments to be made.
How is the exit payment refund determined?
Your individual the lifestyle community retirement village resident agreement sets out the rules for calculating your exit payment.
For example, your resident agreement might refund your ingoing amount less the deferred service fee and the resale fee.
Your resident agreement could determine your deferred service fee as 3% of your ingoing amount for each year or part of a year, from the start date in your resident agreement until a new resident takes over your former independent living unit.
The resale fee could be a flat charge for finding a new resident and preparing the legal paperwork for a new resident.
Basing the refund amount on your ingoing amount does not give you any part of the capital gain after deducting the refurbishment costs.
Remember, you bought the lifestyle not a property investment.
Another the lifestyle community retirement village might use the next resident’s ingoing amount as the basis for determining your exit payment and the deferred service fee to be deducted.
But your resident agreement could require that the full costs of the refurbishment and renovation of your former independent living unit home are deducted from your exit payment.
This approach to determining the refund on exit allows for the outgoing resident a share in the capital gain, but the full costs of refurbishment are deducted from the refund.
Remember, you are buying the lifestyle not a property investment.
How to reduce disappointment on exiting a lifestyle community retirement village.
Gaining a clear understanding of the terms of the resident agreement before you sign up for your preferred lifestyle community retirement village unit could reduce the risk of disappointment later,
Christine at Financial Care Services helps clients to understand the financial aspects of the offered resident agreement.
Christine at Financial Care Services could illustrate the amounts that you could expect to have refunded after you had ‘occupied’ the lifestyle community retirement village for, say, three, six, or ten years.
You could then consider if the deferred service fee and other exit charges would be a reasonable price for the seniors lifestyle that you are planning to purchase.
Christine at Financial Care Services could also illustrate the impact changing your home could have on your Age Pension.
Releasing capital by selling your family home and buying into a lifestyle community could downsize your Age Pension as well as your home.
The Commonwealth Seniors Health Card holders enjoy the same concession prices for PBS medications as Age Pensioners.
The Commonwealth Seniors Health Card has no Asset Test just an Income Test that is more generous than the Age Pensioner Income Test.
Christine at Financial Care Services could help you claim the Commonwealth Seniors Health Card when a change of home ends your Age Pension.
Clients are encouraged to have family members attend the lifestyle community retirement village consultation with Christine at Financial Care Services so that they understand their parents’ decision to buy the lifestyle.
We hope to minimise the chances of “Dad and Mum would not have signed up for this lifestyle community retirement village, if they had known the full cost.”
When the potential costs of lifestyle community retirement village living look too high
Seniors who do not want to buy the whole lifestyle community retirement village living package could choose to live independently.
Independent retirees can choose the services they want.
For example, you could buy a membership to the community fitness and aquatic centre to use the community swimming pools, gyms and exercise classes.
Another option could be a private gym and/or Pilates studio with physiotherapist in attendance.
New luxury apartment complexes are opening in prestige suburbs.
You could buy the strata title to the apartment of your choice.
These buildings may include lap pools, fully equipped gymnasiums, private dining rooms and outdoor lounge areas for the exclusive use of residents.
The maintenance and cleaning of these residents’ facilities together with a concierge service, would be included in the monthly body corporate fee.
If the prestige lifestyle is not your preferred option, then you could buy an apartment, town house or home unit and separately purchase the services you want.
Alas, being a senior would not protect you from noisy neighbours or partying tenants.
You might retain the responsibility of calling trades and maintenance teams when you home stops functioning smoothly.
Your fellow apartment owners might be looking to you to be active on your building’s body corporate committee.
Retirees with skills and ‘spare time’ are needed to help with explaining the sinking fund for replacing the lifts and other renovation works.
After considering your options, you might conclude that your preferred option is to buy the lifestyle community retirement village package.
About Christine at Financial Care Services
Christine Hopper of Financial Care Services helps clients navigate the Centrelink Age Pension Claim process.
Christine could help you inform Centrelink of the sale of your former principal residence and purchase of the right to occupy an independent living unit within a lifestyle community retirement village.
Christine at Financial Care Services writes these Newsletters.
She can help you to understand your Age Pension and/or Seniors Health Card situation.
Christine Hopper of Financial Care Services offers ‘personal factual financial information’ in the form of an Illustration of the amount of Centrelink Age Pension you could receive today provided that you satisfied the age and residency conditions for a Centrelink Age Pension.
If your Age Pension would be cancelled after the move then Christine could help you Claim a Commonwealth Seniors Health Card via MyGov or the paper form if you really do not want to engage with Centrelink on-line.
Christine at Financial Care Services charges hourly rate fees for helping with Centrelink matters.
Christine at Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants.
Our core values of working with clients in their lifestyle transitions supports claiming DVA and Centrelink entitlements.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle or Centrelink issues please contact Christine Hopper or call +61 3 9808 0338.
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Christine Hopper
Financial Care Services
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact Christine@financialcareservices.com.au
Address – mail to 2B Thomas Street, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
Past newsletters – see http://financialcareservices.com.au/newsletters/
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.
© 2024 Christine Hopper @ Financial Care Services. All rights reserved.