As New Zealand’s population ages, the demand for retirement villages is steadily increasing. This means advising on retirement village agreements has become a core part of the work by elder law specialists.
Because communities offer a blend of independent living choices with the added benefits of support and healthcare, they are an attractive option for many. However, like any major decision, moving into a retirement village has its pros and cons.
GOOD THINGS:
Security and safety: Retirement villages often provide a secure environment, usually with things such as CCTV (surveillance cameras) and on-site staff. This can be particularly reassuring for older individuals who may feel vulnerable living alone. Knowing that help is available at all times is a significant comfort.
Maintenance-Free: The village invariably handles all maintenance tasks, from gardening to repairs, allowing residents to enjoy a hassle-free lifestyle. This can be a considerable relief for those who no longer wish to manage the upkeep of a home.
Healthcare: Many villages offer healthcare services, either on-site or through partnerships with local providers. This means residents have easy access to medical and other care. Some villages even provide specialised care units for residents with higher needs, such as dementia care.
Amenities: They often come equipped with a range of amenities designed to enhance quality of life. These may include a swimming pool, gym, library, cafe and bowling green.
THE DOWNSIDE:
Costs: The financial aspect of moving into a retirement village is significant. Residents typically pay a large entry fee which is held in trust during their time at the village. A portion of this fee is retained by the village when the resident leaves or passes away. There are also weekly or monthly fees.
No Ownership Rights: These days, residents usually purchase a ‘right to occupy’ rather than an ownership stake in the property. This means they do not benefit from capital gains, and the unit cannot be freely sold or rented out.
Loss of Autonomy: Villages have rules and regulations, and some individuals may feel a loss of autonomy and independence as a result. The structured environment might not suit everyone, particularly those who value complete control over their living arrangements.
MAKING THE DECISION:
Choosing to move into a retirement village is a significant decision that should be made after careful consideration of both the benefits and potential drawbacks. Here are a few tips to help you in this process:
Research: Visit multiple villages to compare what each offers you. Pay attention to facilities, services, and overall atmosphere. Speak with current residents to hear their perspective on village life.
Finances: Make sure you fully understand the financial commitments involved, including entry fees, ongoing charges, and the eventual exit fee structure.
Legal Advice: Retirement village contracts are complex. Obtaining legal advice from somebody who knows what to look for is crucial.
Involving Family: Consulting with family members in the decision-making can provide additional support and perspective.
The bottom line is that entering a retirement village should be viewed as a form of ‘consumption decision’ rather than an investment. The costs involved are significant and what you are purchasing is not an asset which will appreciate over time, but rather a lifestyle tailored to provide comfort, security and convenience in your golden years.
Accordingly, it is crucial to ensure the lifestyle offered aligns with your personal preferences and needs so that what you are “buying” is worth the financial outlay.
