Moving into a retirement village can be an attractive option for many people approaching retirement, providing the opportunity to both downsize and transition into a supportive and secure community.

There are significant financial considerations that must be taken into account before deciding if a retirement village is right for you, as these can have a major impact on the long-term sustainability of your finances.

In terms of ingoing fees, when entering a retirement village you will generally be required to pay an entrance fee, sometimes referred to as the purchase price along and possibly an upfront management fee. These fees can vary depending on the particular village and the services they offer so it is important to read through all associated contracts in detail before signing any documents. In addition, there may also be other fees such as stamp duty or legal costs which can add up; speaking with an experienced financial advisor and lawyer is recommended when considering these costs.

Ongoing fees associated with living in a retirement village include service charges, rates, utilities and insurance which should all be taken into account when budgeting for future expenses. It is important to remember that some of these costs may increase over time due to inflation or other factors so it is wise to ensure you are able to comfortably cover them in your finances well into the future.

Exit Fees refer to costs incurred upon leaving the retirement village often referred to as deferred management fees along with resale costs including real estate agent commissions, legal expenses and refurbishments. Some contracts even offer
a percentage of the capital gains if any. It is essential that you understand how these fees are calculated as they can significantly reduce any profits made from selling your unit in the future.

Overall, understanding the financial considerations of moving into a retirement village is key when making an informed decision about whether this option is right for you. Taking time to look at all associated costs including ingoing and ongoing fees as well as potential exit fees in order to ensure long-term sustainability of your finances will help avoid unexpected surprises down the line.

To learn more, call us on 1300 10 22 33 or book a 15-minute call (at no cost) via our website phillipswp.com.au

Disclaimer: This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Phillips Wealth Partners or your professional adviser. Phillips Wealth Partners Pty Ltd ACN 624858420 is a corporate authorised representative of Insight Investment Services Pty Ltd AFSL 309996.