There’s a lot to think about after you’ve decided it’s time to downsize from the family home and are considering different types of retirement living options.
Firstly, there’s location. Are you looking to move to a popular lifestyle destination? Or is being closer to family the goal?
What type of retirement living is right for you? Are you looking to do more travel? Or perhaps you’re looking for somewhere to indulge your hobbies?
And then what of the financial considerations?
You might be surprised to know that there isn’t a one-size fits all solution for a post-retirement lifestyle and there are significant differences you need to understand before making your decision.
Here’s four types of retirement living in Australia and suggest a few questions to keep in mind when choosing the right retirement option.
1. Traditional Retirement Village
A retirement village is the first thing many people think of when considering retirement.
This takes the form of an apartment building or resort-style complex where residents share community facilities and recreation areas. While the average age of a resident is 81 years old, people living there are mostly independent but have ready access to more advanced support services if needed.
Retirement villages offer the benefit of low maintenance homes with no gardens and full independence for residents to lead their own lives. Depending on the type of village, there may be onsite management and a gated entry.
Retirement Villages: Pros
Retirement villages offer a sense of community with residents of similar age and interests. Some of these villages have a range of facilities to enable people to socialise together. Depending on the average age of the residents, these facilities may be focused more on sedentary activities instead of active pursuits.
Retirement village homes may take the form of villas or apartments, and these downsized homes reduce the amount of cleaning and maintenance required.
Some retirement villages are associated or are co-located with nursing homes which provides a continuity of care for older people who are ill or become infirm.
Retirement Villages: Cons
Many older retirement villages may not allow pets or may place restrictions on whether or not you can have overnight visitors or place limits on how many people you can welcome into your home.
One of the biggest downsides of retirement village living is the complex nature of the contracts and the extensive range of fees that can include entry and exit fees, and capital gains fees.
Retirement villages also charge ongoing management fees and may charge additional costs such as deferred management fees which may eat further into your retirement income.
2. Aged Care & Assisted Living Facilities
Older adults may choose to sell their own home or other assets to help cover the costs of aged care, but they do not typically own the property within the facility itself.
They may have to pay a large entry fee and may be liable for on-going costs for the duration of their stay.
Aged care accommodation is designed for older adults who require help with daily living tasks, such as bathing, dressing, and meal preparation.
These facilities can include nursing homes, which offer higher levels of medical care and support for those with complex health needs. Aged care facilities are regulated by the Australian Government’s Aged Care Quality and Safety Commission.
These facilities are primarily designed to provide care and support to older adults who have complex health needs, disabilities, or dementia. As such, they may not be suitable for someone who is over 50 and in good health.
Aged care facilities may offer a range of accommodation options, such as single or shared rooms, or self-contained units or apartments. However, in most cases, the ownership of the property stays with the aged care facility or the provider of the facility.
Aged Care & Assisted Living: Pros
For older Australians with complex care needs, aged care facilities offering assisted living services provide an important service with medical and nursing care as you need it.
Some of these facilities do put a focus on social activities but these are necessarily limited by the infirmities of the residents.
Aged Care & Assisted Living: Cons
They may not be suitable for healthy, independent and active over-50s because these facilities cater for those who struggle to live independently. Restrictions may include limits on where and how you can spend time with visitors and whether you can have pets.
In some cases, you may be required to share a room with others.
3. Rental Retirement Villages
Retirement lifestyle villages that offer rentals are less common than resorts where you buy in. They may not be available in your preferred location or only offer co-living arrangements where you share a rental home with other people of the same age.
Rental Retirement Villages: Pros
Retirement villages that offer rental accommodation for older Australians is a solution for people who have fewer financial resources.
Rental Retirement Villages: Cons
Unfortunately, there are fewer options for seniors who need rental accommodation compared to those who can either own their retirement home or can afford the substantial sum required to buy into a leasehold arrangement.
This means you may not be able to live in an area you prefer which may present difficulties regarding connection to family and access to services. You may not be able to have your own home or unit. Many retirement rentals are co-share arrangements which means you will have a flat mate.
Rental retirement accommodation may have no community facilities or very limited social amenities.
4. Land Lease Communities or Lifestyle Villages
In a land lease community, residents own the home but lease the land on which the home sits. This model offers advantages to older Australians, such as lower upfront costs and ongoing expenses, as residents do not have to purchase the land.
Land Lease Communities: Pros
The home price is usually lower than a conventional freehold build because you are only paying for the cost of constructing the home and not for the land it’s on.
After the purchase of the home itself, land lease communities only charge a weekly site rental to cover ongoing maintenance of facilities and grounds. That means that when you decide to sell, you keep 100 percent of the capital gains made on the home.
Moving to an over 50s lifestyle resort also saves you more than time. Many residents report saving money as well. GemLife, for example, helps residents save on:
- Lower electricity bills thanks to GemLife’s Virtual Power Plant program
- Reduced home maintenance expenses
- Fewer household expenses such as gym memberships because the facilities are on your doorstep
Land lease developers who specialise in creating communities for active over 50s understand the range of community, social and leisure facilities that the demographic demands. They often include more sporting and active leisure facilities than found in retirement villages.
Learn more about why lifestyle resorts are worth the investment here.
Land Lease Communities: Cons
One big point of difference between conventional home ownership and buying into a land lease community is that you don’t own the land your home is built on.
However, there are some important financial advantages with land lease communities. These include:
- No stamp duty to pay which saves you thousands
- The homes are more affordable as you are not paying for the land
- People eligible for the Australian aged pension or Department of Veterans’ Affairs pensions may also qualify for rent assistance.
What’s the Difference Between a Lifestyle Village and a Retirement Village?
There is still a lot of confusion when it comes to deciding on your retirement lifestyle.
We’ve outlined the pros and cons about retirement villages and over-50s lifestyle resorts but let’s break it down further.
Retirement Villages
Compared to lifestyle villages, retirement village contract types are complex. They include things like entry and exit fees, deferred management fees, capital gains fees, refurbishment fees, recurrent charges. And each retirement village has their own terms, conditions and fee structures which makes it difficult to make comparison between resorts.
A 2020 Macquarie University study found that with some retirement village contracts stretching to 500 pages, only one out of 20 university-educated retirees surveyed could work out which one out of three contracts were the most cost-effective.
When you decide to sell, you might be required to sell through the retirement village operator which might limit the reach of your property meaning you won’t necessarily realise the best price for it.
You can learn more about how retirement villages work here.
Lifestyle Villages
Over-50s lifestyle resorts are popular with a much younger group of people who are keen to enjoy the benefits of resort-style living in a gated community that offers security and peace of mind for longer travels. The average age of homeowners in resorts like GemLife is ten years younger than those living in retirement villages.
Another difference can be found in the contracts which are much simpler and more transparent. There is the contract for the purchase of your home, which you own outright, and then there is the contract for the modest weekly site rental.
Because lifestyle villages are designed for more active over-50s, many offer premium level resort facilities including indoor and outdoor swimming pools, fully equipped gym, beauty salon, grand ballroom, café and bar facilities, sports facilities including tennis and pickleball courts, ten-pin bowls, lawn bowls, art studio, workshops and more.
When you decide to sell you have a choice to selling through the resort or your choice of real estate agent. You keep all proceeds of the sale (less standard selling costs) as well as the capital gains.
You can learn more about the benefits of lifestyle villages here.
The Verdict
Retirement village or lifestyle resort? The right retirement living solution for you is very much dependent on your individual circumstances. This is why it is so important to do your homework, look at all the options out there, and seek expert advice before making your decision.
If you are fit, healthy and active you might find that a land lease over 50s lifestyle resort suits you better than a retirement village – particularly if you are concerned about exit fees, deferred management fees and capital gains fees.
Land Lease Community lifestyle resorts offer all the downsizing benefits of retirement living but with the flexibility to live the lifestyle you want and financially protecting what might be still one of your financial assets – your home.
If you are elderly and have health issues that require management, you might find that a retirement village – especially one co-located with a nursing home – might suit your circumstances better, particularly if you intend to fully use the value of your home to fund your aged care needs.
You can learn more about the differences between retirement villages and lifestyle resorts here.
Discover the GemLife Difference
If you’re looking for a high-quality, low-maintenance lifestyle that gives you more time to do the things you want to do, then make an appointment to visit a GemLife resort and see the difference for yourself.
GemLife’s over-50s lifestyle resorts allow you to experience the very best with our luxurious homes and premium facilities. Available at affordable upfront price points, our resorts are found in some of the most sought-after locations in the country.
To learn more about GemLife, our facilities, and resort locations, enquire with us today, or request an info pack.