Is a Retirement Village a better option than Aged Care?
Retirement villages and residential aged care facilities offer different lifestyles and services, and they aren't direct substitutes for each other.
In the following article, our Aged Care Specialist Leandro Bonin explores this important subject further, providing insights to help you start planning ahead and achieve your objectives.
Living Options and Government Support
Residential care provides accommodation alongside full-time daily living support, with costs shared between the resident and government through subsidies and means-testing. These standards and fees are uniformly regulated across Australia by the Federal Government.
Conversely, retirement villages primarily offer independent living, though additional care services can be purchased. These are regulated by state laws, meaning rules and costs can vary significantly. It’s crucial to thoroughly understand the village's contract and ensure you have adequate financial resources.
Impact on Your Pension
Pension eligibility is means-tested. Owning your home usually means it’s exempt from asset tests, but in retirement villages, the title deed typically doesn't list your name.
Instead, your homeowner status and asset evaluation depend on your entry contribution. Paying above a certain threshold categorises you as a homeowner with exempt assets, while paying below this makes you a non-homeowner with assets assessed against a higher threshold.
Additionally, living in a land-lease community—where you own the building but lease the land—always classifies you as a homeowner for Centrelink purposes.
Financial Considerations
Choosing between a retirement village and residential aged care depends on both your daily needs and financial capability. It’s essential to consider entry costs, ongoing fees, and the financial implications upon exit.
In residential care, the room fee is fully refundable and government-guaranteed. However, in a retirement village, you may not recover the full purchase price, and there are no government guarantees, which poses a risk if you misjudge your finances and deplete your funds.
Conclusion
Deciding where to live in later life is a significant decision that should be made with careful financial planning.
We offer guidance on both options to help you consider the long-term financial impacts.
For a detailed discussion about your care needs and to review your financial options, feel free to reach out to us on 03 9584 3343.