Moving from retirement living to residential care
We often hear from our clients that moving to a retirement village is a lifestyle decision. When looking to downsize, they tell us there are several benefits. This includes the ability to continue to live independently, socialise with like-minded people and provide increased security and wellbeing. You may also be able to access some personal care and home help support.
Some people may live in a retirement village and later move into an aged care facility when their care needs increase and they are no longer able to live independently. When this occurs, there are various financial considerations which may require you to make decisions around how to structure your finances.
Exiting the retirement village
Retirement village (and land lease community) contracts are commercial arrangements and financial details vary greatly. When you leave (including for a move into residential care) the contract usually terminates, and the home is sold to a new resident.
A quick summary of key financial impacts of exit is:
| Retirement village (lease/licence arrangement) | Land-lease community | |
| Amount repaid to you | Depending on the contract, you receive a refund of either the amount you paid or the sale price, less departure fees and other charges. | You need to sell the home and receive the sale proceeds, less costs of selling. |
| Departure fees | Deferred management fees and refurbishment costs are generally deducted from your refund. | You may incur selling fees and expenses. |
| Access to capital gains | It depends on the contract whether you receive any share of capital gains, or not. | Depends on the change in market value – you receive gains if the home is sold for more than you paid. |
| Ongoing fees | Ongoing maintenance may be payable until sold, but for a limited number of days. | You may incur ongoing fees until your home is sold. |
Paying to move into residential care
Like any property sale, the refund from the retirement village may not be paid until the unit is sold. The sale process is often out of your control and timing may be protracted. You may have more control in a land lease community, but you still need to find a buyer.
The aged care fees start when you move into care. Financial advice can help you to plan how to use your other savings to fund the costs in the interim. There are several care and accommodation costs associated with a move to permanent residential aged care. These include:
- Accommodation costs – A payment made towards the cost associated with a resident’s room, depending upon their means assessment.
- Basic daily fee – A fee that applies to everyone that covers the everyday services provided at the aged care facility, which is paid by all residents.
- Means tested care fee – A contribution that residents may be required to make that goes towards the cost of their care, calculated based on a means assessment.
- Additional/Extra Service fee – An additional feefor additional hotel-type services that you agree to with your provider.
Depending on the state where you live, legislation may impose rules that help with this transition by requiring village operators (not land lease) to advance some of the sale proceeds as a lump sum or daily fee to help with aged care accommodation cost.
Ask us for help
We understand the uncertainty and stress that comes with transitioning a loved one into residential aged care. If you need assistance, call us to today to see how we can help you understand the impacts of a move into residential care, so you can make the right decisions.
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