New – or tried and trusted?

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Experts give their views on whether retirees should go for just-built or older retirement developments and answer other property questions

Q: MY PARENTS are looking to move into a retirement village and we are not sure if we should opt for a brand-new development or an existing development. What are the biggest differences between the two? And what are the pros and cons of both options?

A: The biggest difference when it comes to choosing between an established lifestyle village and a new lifestyle village is typically amenities and finishes, as you’re more likely to get modern amenities and topof-the-range finishes in a new development.

Pros of an established village:

• Able to get feedback from existing residents on their experience.

• Existing sense of community among residents.

• An established reputation and history for you to research and to factor in when making your decision about if this retirement village is right for you.

Cons of an established village:

• Facilities and amenities are often tired and in need of an update.

• Staff may have become apathetic over time and be in need of re-training.

• Progressive trends in retirement living, such as the integration of technology, might not be present in older villages.

Pros of a new development:

• Newer villages are designed with the latest trends in retirement living in mind to ensure comfort and overall experience.

• Modern facilities and top-ofthe-range finishes.

• Residents go in with an open mind and on an even playing field, so no cliques or biases.

• Greater emphasis on lifestyle rather than functionality.

• Staff will have undergone up-to-date training.

Cons of a new development:

• Reputation and history need to be established.

• No existing residents to consult.

• Possibility of minor teething issues in the beginning. – Gus van der Spek, owner of life rights company Manor Life and developer of Wytham Estate

Q: We will soon be moving into a retirement village and are considering the different developments on offer. What are the standout features or main aspects that we should take into account when deciding between the different options?

A: This is a personal choice, but location would be the first thing to consider. Many retirees move closer to their children and grandchildren rather than moving to quaint seaside places or remote small towns.

A second big consideration is access to medical care. The third factor should be price, which is when you consider what you get for your money.

I would carefully research the developer and learn about their reputation and track record. Then I would advise that you look at amenities, house design (whether it suits your lifestyle), security and so forth.

Moving into a retirement estate is a huge decision and it’s important to make sure the fundamentals of location, affordability and who you are buying from/making a commitment to, are taken care of. – Miguel Rodrigues, director at Rabie

Q: I keep hearing about retiring in a life rights property but am not entirely sure what that means. What is the difference between buying a property normally and a life right? maintaining their lifestyle.

Essentially, it affords the retired individual the right to occupy a unit in a lifestyle estate for the rest of their life, while ownership of the property is retained by the developer.

This “right” is paid for with a capital investment upfront and on relocation or death the unit is ceded back to the development, usually for the initial invested price, and this payment becomes part of the deceased estate. Capital appreciation goes to the developer.

With a life right comes a list of continuous services as the developer doesn’t bow out on completion as happens with freehold and sectional title retirement schemes.

Retirees who have less capital to invest will benefit from the lower cost investment, which affords them a lot more home and services for their money than any other form of purchase, and tight monthly budgets will also be eased by lower levies as all maintenance costs are covered by the development. – Lisa Stredder, retirement property specialist for Lew Geffen Sotheby’s International Realty in the Winelands

Q: My wife and I are almost at retirement age and we want to make sure we will be covered financially. What can we do to ensure we will have enough to live comfortably?

A: When entering retirement, you are shifting to measured spending and you need to have a clear game plan in mind on how you will manage your money and stretch it till the end.

These are six common mistakes retirees make:

Overspending:

Many retirees start by pursuing all the things they didn’t get to do while working, such as travelling, picking up a new hobby or renovating their homes. They underestimate the amount of money they’ll spend in those first few years of retirement.

Withdrawing large sums from pension:

This can put your portfolio in jeopardy of running dry. If you withdraw large amounts of money frequently, you may suddenly need to make major changes in your lifestyle and spending just to get by.

High-risk investments:

Retirees need to consider their risk profile when looking at suitable investments post retirement. Unfortunately, time is limited to make up capital losses, should they occur in high-risk investments.

Falling prey to scams:

Retirees are among the most targeted for scams. Fraudsters are always on the prowl, looking for ways to scam retirees of their pension payout and contributions.

Cashing out pensions too soon:

South Africans can retire from as early as 55. However, the biggest drawback to an early pension is that it will reduce the amount of money you receive each month.

Misconception about paying tax:

Most forms of retirement income are taxable. Many retirees are of the impression that their money does not get taxed when they retire leading them to withdraw large sums of money frequently. – Himal Parbhoo, FNB chief executive of Cash Investments

Many retirees choose to move closer to their children and grandchildren, rather than opt for living in a distant seaside town. PICTURE: HUMPHREY MULHEBA/UNSPLASH