When you need to move from retirement villages

For many people, a retirement village may offer a great retirement living solution, especially when you start to find maintenance on a home more difficult or you want convenient social interactions. You might also be able to access some personal care and home help support.

However, as your care needs increase, you might be faced with the decision to move out of the retirement village and into residential aged care. This move will have financial

A quick summary of key financial impacts of exit is:

AMOUNT REPAID TO YOU

DEPARTURE FEES

ACCESS TO CAPITAL GAINS

ONG OING FEES

Paying to move into residential care

implications and you may need to make decisions around how to structure your finances.

Exiting the retirement village

Retirement village (and land lease community) contracts are commercial arrangements and financial details vary greatly. When you leave (including for a move into residential care) the contract usually terminates and the home is sold to a new resident.

RETIREMENT VILLAGE LAND–LEASE COMMUNITY (LEASE/LICENCE ARRANGEMENT)

D epending on the contract, you receive a refund of either the amount you paid or the sale pric e, less departure fees and other charges. This is often significantly less than you paid when you moved in.

D eferred management fees and refurbishment costs are generally de ducted from your refund.

It dep ends on the contract whether you receive any share of capital gains, or the op erator keeps all gains.

Ongoing maintenanc e may be payable until s old, but for a limited number of days.

You need to sell the home and receive the sale proceeds, less costs of selling.

You may incur selling fees and expenses.

Depends on the change in market value – you receive gains if the home is sold for more than you paid.

You may incur ongoing fees until your home is sold.

The aged care fees start when you move into care. Financial advice can help you to plan how to use your other savings to fund the costs in the interim.

Depending on the state where you live, legislation may impose rules that help with this transition by requiring village operators (not land lease) to advance some of the sale proceeds as a lump sum or daily fee to help with aged care accommodation cost.

Like any property sale, the refund from the retirement village may not be paid until the unit is sold. The sale process is often out of your control and timing may be protracted. You may have more control in a land lease community, but you still need to find a buyer.

Ask us for help! Call us today on 4325 0884 to see how we can help you with making the right decisions and understanding the impacts of a move into residential care.

Sophie Doyle (AR#000470612) is an Aged Care Specialist at Morgans Financial Limited (Morgans AFSL 235410 / ABN49 010 669 726); with a passion for assisting people make informed financial decisions, as they navigate their way through retirement and aged care. Disclaimer: While every care has been taken, Morgans Financial Limited makes no representations as to the accuracy or completeness of the contents. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at 21 February 2023.