If you’re thinking about moving to a retirement village, you probably know how complicated it can be, financially speaking.
There are a myriad of fees associated with retirement villages: upfront payments, ongoing fees during your stay, and charges upon departure (exit fees). The exit fees can involve complex formulas that include a percentage of your original purchase price or future sale price, shares of capital gains or capital loss, renovation costs, sales commissions, and marketing fees. In most states you will find that your exit entitlement is subject to a guaranteed buyback if your unit doesn’t sell within a specified timeframe, but some operators will give you a buyback in a shorter period.
Very complex choices
The complexity multiplies when you want to compare different payment options, different homes, or one retirement village against another. Adding to the complexity is that you also need to consider how each option affects your Age Pension, eligibility for rent assistance, your available budget for spending or investment and the impact on your contribution to a home care package. In the longer term, how much you pay to the village can also affect your ability to fund the move into aged care and how much will be left to your estate.
Enter Rachel Lane, a former financial adviser who has written several books on the financial tips and traps of downsizing and aged care. Rachel has developed a software program called Village Guru which is designed to unravel the financial complexity associated with downsizing to a retirement village or land lease community. This innovative tool is gaining popularity among both operators and consumers alike.
Rachel Lane’s motivation for creating this software was simple. She explains, “Almost every person I spoke to who had downsized to a retirement community, including my own grandmother, expressed the same sentiment: ‘My only regret is not moving sooner.’ I wanted to eliminate the financial confusion from that decision. I wanted people to make that move with confidence.”
Understandably there is a lot of confusion surrounding village fees, Age Pension implications, Rent Assistance, and Home Care Package costs and that often leads to inaction. She says, “This delay isn’t just a matter of weeks or months; for many, it stretches into years. These are years they could have spent enjoying the lifestyle villages have to offer— feeling safe, being part of a vibrant community, engaging in hobbies and sports, in the words of a millennial ‘living their best life’.”
Working through all of the intricacies of financial arrangements can be daunting, particularly for those who don’t deal with these matters regularly.
Rachel adds, “Regrettably, many individuals considering downsizing into a village find it almost impossible to work out what all these financial factors mean for them. In theory, people can calculate village costs from the disclosure document, use the Age Pension calculator and Home Care costs estimator on this website. In reality, it’s nearly impossible, even for those comfortable with number crunching. Then they need to repeat it a few times if they are comparing different properties, if the village has different payment options, or where they are comparing one village against another.”
So, what exactly does Village Guru software do?
“In a nutshell, Village Guru is a software tool that is used by retirement villages and land lease communities to create reports. These reports break down the ingoing, ongoing, and outgoing costs associated with the village, alongside an estimate of your Age Pension and Rent Assistance entitlements, as well as your Home Care Package fees and funding (if applicable). The software enables you to see up to three options side-by-side which makes it easy to compare different options. For example, if you are moving to a village that has payment options you can see how they compare, or you may wish to see how different properties (such as a villa or an apartment) compare within the village you are looking at, or if you are comparing different homes across different villages you can see how that looks too.”
There are hundreds of villages already using the software and the list is growing, from big household names like Ingenia, Aveo, Australian Unity and Bolton Clarke to Anglicare, Living Choice, Sencia and more.
Where can I get a Village Guru report?
Use our ‘Find a village’ page to see where you can get a Village Guru report.
It’s important to know that while the Village Guru Report is great information it’s not financial advice. You should seek advice from an accredited Retirement Living and Aged Care Specialist adviser who can help you understand all of the costs and provide you with strategies for meeting your financial objectives.