Retirement village costs
Thinking of moving into a retirement village? It’s a big step towards a relaxed and community-focused life. But before you take the plunge it’s important to understand the costs involved so you can plan with confidence.
Retirement living costs vary depending on where you live, the type of retirement village unit or home you choose and the amenities. Generally, these costs fall into three main categories: entry fees, ongoing fees and departure fees. Let’s break them down in simple terms.
Entry fees and payments
The entry fee is the amount you pay to move into a retirement village, sometimes called an ingoing contribution, purchase price or assignment fee.
This one-off payment gives you the right to live in your unit and can vary depending on location, unit size, building insurance and the village’s facilities. Some villages also charge stamp duty on top of the agreed purchase price so check before you sign anything.
Ongoing charges
Once you’ve moved in there are ongoing fees to help to cover costs and the cost of running and maintaining the village. These will include:
- Maintenance fees for gardens, communal areas and facilities
- Village management costs
- Insurance and recurrent charges for shared services
- Additional services like meals, cleaning and laundry (if available)
Residents need to pay their utilities, personal insurance and council rates.
Departure fees
When you leave the village there are usually departure fees to consider. The most common is the Deferred Management Fee (DMF) which helps keep fortnightly fees lower while offering flexibility around entry payments.
Other departure costs will include:
- A share of any capital gain from selling your unit
- Refurbishment costs to prepare the unit for resale
- Marketing fees to find a new resident
Deferred Management Fee (DMF) and capital gains
The DMF is the exit fee, paid when you permanently leave the village and is used to help fund the upkeep and improvement of village facilities. It’s usually calculated as a percentage of your initial payment, often around 30% if you’ve lived in the village for six years or more. For shorter stays, it’s typically 5% per year. Some villages also take a portion of any capital gains from the resale of your unit, so check your contract for details.
Active lifestyle
Many villages have beautifully maintained gardens, social activities and shared communal facilities, like clubhouses, gyms and swimming pools. Some villages also offer extra services like meal plans, fitness programs and personal care so you can tailor your lifestyle to suit your needs.
Understanding the contract and fees
Retirement village contracts can be complex, covering everything from tenure types to financial models. Before you sign a contract with a retirement village operator, make sure you:
- Go through all fees carefully
- Understand what’s covered by the maintenance reserve fund
- Clarify how the village calculates fees over time
- Get professional advice from a legal expert and financial planner
Total retirement village living costs
To understand the real cost of living in a retirement village consider:
- Entry fee and if stamp duty applies
- Ongoing service and maintenance fees
- Departure fees including DMF and refurbishment costs
- Personal expenses like utilities, insurance and council rates
Talk to a financial planner to work out what’s affordable for you in personal circumstances and ensure there are no surprises down the track.
Choosing the right one
Choosing a retirement village isn’t just about the numbers, it’s about finding a place that feels like home.
Visit a few different villages, compare the costs and services and talk to current village residents to get a real sense of what life is like there. Always read the fine print on fees and contracts and don’t be afraid to ask questions before you decide.
Understanding retirement village costs is key to making an informed decision. By considering entry, ongoing and departure fees, and getting expert advice, you can find a community that fits your budget and lifestyle.At St Ives, we have vibrant, secure and welcoming retirement communities to help you enjoy your next chapter. Get in touch with us today to find out more about how we can support your retirement journey.