When considering retirement villages, you’ll often find two main accommodation types: independent living units or apartments for those living independently, and serviced apartments for those needing more support. These serviced apartments are typically located within the village’s main building, close to communal dining areas, lounges, and the village’s social hub, making them a convenient option for those seeking a balance between independence and care.

Serviced apartments are often viewed as a middle ground between living fully independently and moving into aged care. They offer privacy in a purpose-built apartment designed to support ageing in place, while providing help with tasks you may no longer want or be able to do on your own.

Serviced apartments: lower upfront costs, higher ongoing fees

While serviced apartments can be a more affordable option upfront compared to other types of accommodation, it’s important to consider the long-term financial picture. Many serviced apartments are priced under $252,000, which can seem like a great deal. However, ongoing fees for these apartments tend to be higher than those for independent living units because they cover more services. Be sure to ask exactly what is included in these fees and what services might be charged on a user-pays basis.

Another critical factor is the exit fee. You’ll need to know what this entails and whether the village offers a guaranteed buyback if your apartment doesn’t sell within a specified period.

How will it affect your pension?

If you’re receiving the age pension, it’s crucial to understand how moving to a serviced apartment might affect your pension and other entitlements.

Serviced apartments are generally available under a leasehold or licence arrangement. This payment determines whether you are classified as a homeowner, which in turn impacts your eligibility for rent assistance. If you pay $252,000 or less for your apartment, you’re considered a non-homeowner, meaning the value of your apartment is counted towards your assets, and you may qualify for rent assistance on the ongoing fees. For example, a single person paying $431 or more per fortnight in fees could receive up to $211 per fortnight in rent assistance.

On the other hand, if you pay more than $252,000, you are classed as a homeowner, and the value of your home is exempt from the asset test. In this case, you won’t be eligible for rent assistance.

Additionally, the two-year pension asset test exemption, which many associate only with aged care homes, can also apply if you’re moving into a retirement village to access care.

Access to care and services

One of the main reasons people move into a serviced apartment is the need for help with daily tasks like cleaning, meals, and transport. Whether you need care now or anticipate needing it in the future, serviced apartments can offer a tailored level of support.

Care is typically delivered through a combination of government-funded home care packages and private services available within the village. Important questions to ask include: Who will respond when the call bell is pressed—will it be a carer or emergency services? What happens if you require more care, and what will it cost? Are there any circumstances where you could be asked to leave the village?

Finding the right balance

Serviced apartments can offer an ideal blend of independence, security, and support. By understanding the costs involved, how your pension will be affected, and what to expect when it comes to care and exit fees, you can avoid unpleasant surprises and make an informed decision that best suits your retirement lifestyle.