Some Retirement Villages are charging fees for a two-bedroom apartment that soon add up to the equivalent of renting a luxury waterfront mansion.
Residents who live in a village for a relatively short time may find the fees and charges paid to move in, while they live there, and upon leaving can be hundreds of thousands of dollars – within just a couple of years.
If a person then needs to enter aged care, it can be a huge erosion of their savings and assets.
A comparison calculator, developed by Macquarie University, allows intending retirement village residents to compare fees between villages so they can shop around and make an informed decision. Some retirement villages are priced much more favourably than others for similar independent living units.
For the first time, the calculator allows consumers to unravel complicated contracts and gain a better understanding of the full financial implications of entering a retirement village. The difference even within the same village can be a real shock, with some residents likely to pay 75% more than others for exactly the same unit.
This is because different contract options can be much more expensive than people realise, and because of age, gender and longevity factors.
For example, a 91-year old man who lives in a village for 4 years will pay the equivalent of $11,000 a month, while a 68-year old woman who lives at the same village for 20 years will pay $2,700 for an identical 2-bedroom unit.
Until now, it has been challenging for a potential resident to work out exact costs before deciding whether to enter a retirement village. The calculator now allows people to decide whether the lifestyle featured so heavily promoted in sales and marketing material represents actual monetary value.
The calculator uses sophisticated actuarial analysis of all the fees associated with retirement village living: the entry fee, ongoing fees, deferred management and departure fees, with additional information about the resident’s age and life expectancy.