Wealth

Case study: moving to a retirement community

Discover how Albert made sure his move was the right financial decision.

Since losing his wife, Albert, 70, has been struggling to cope with the family home. Here’s how he made the move to the comfort and security of a retirement community.

Making life easier

Albert is financially comfortable, but since losing his wife six years ago, finds maintaining the family home has become an increasingly heavy burden. Now 70, he’s decided it’s time to sell the house and move into a retirement community, but he’s not sure about the possible financial implications.

Gathering information

To make an informed decision, Albert and his daughters carefully researched retirement communities, including:

entry and exit costs
ongoing fees
ownership structure

After identifying his preferred community, Albert discussed his situation with a licensed financial adviser, who was able to outline the financial implications. Working together, they created a plan that ensured Albert would be able to maintain his lifestyle in the retirement community over the longer term, including:

how to best structure his assets (including the capital from selling his house) to provide income
managing his expenses, cash flow and income
planning for later ill health or aged care needs, including funeral planning

Three older men sitting together and one of the older men is laughing

A plan for the future

As the sale of his house would change Albert’s financial situation, his adviser explained that it was a good time to plan for the future. By working with an estate planning lawyer and a licensed tax accountant, Albert was able to ensure his will was valid and could structure his finances and assets in a more tax-effective way. “It’s such a relief to know I can enjoy an active and enjoyable life, while also making the best possible provisions for my daughters,” Albert says.

Making the right move

By carefully researching his options and getting the right advice, Albert has real peace of mind that he’s made the right decision. He feels confident he can enjoy his retirement to the full while doing the best for his family.

Tips for funding a move to a retirement community

If, like Albert, you’re considering selling your house to move to a retirement community, you’ll want to be sure it makes financial sense. Listed below are some of the most important questions you need to consider.

Tips on how to fund your move to a retirement village

How much will it really cost?

Retirement communities vary in price and have a range of cost structures. Make sure you have a complete breakdown of initial and ongoing costs, plus all other fees (such as exit fees). It’s also worth having the contract checked over by a lawyer who understands the requirements and fees and how they’ll be applied.

What is the ownership model?

Many retirement communities operate on a “loan lease” (or license) model, which typically means you make an “entry payment” exchange for a 99-year lease, then pay a monthly fee to cover day-to-day maintenance. When you leave, your entry payment and any capital gain is returned to you or your estate, less any fees the owner is entitled to charge. It is important to note that there are numerous ownership structures however, and contracts should be reviewed carefully for any retirement community you are interested in, to identify applicable fees and obligations.

Is the deposit refundable?

Most retirement villages ask for a deposit on the entry payment. Before parting with your money, check whether there’s a cooling-off period and if you will receive a full refund if you change your mind.

Will you need to pay stamp duty?

The regulations affecting stamp duty vary by state and territory. However, in general, you can expect to pay stamp duty if your ownership model is strata, community or company title.

How will you pay for it?

While selling your home to move into a retirement community can seem like a straightforward step, there may be financial implications. Will the capital from selling your home affect your Age Pension? Will your income cover the cost of living in the community, or will you need to dip into your capital? It’s important to get financial advice to make sure you’re making the right move.

How will you make the most of the capital from the sale of your house?

If you have funds left over after buying into the retirement community, it makes sense to put them to work. Again, talking to a licensed financial adviser will help you to structure and invest your assets so you can meet your financial goals. At this time, it’s also worth reviewing your estate and funeral plan to make sure you and your beneficiaries are set up for the future.

Further help and information

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