But if you don’t require constant care and you prefer to live independently, retirement villages may be a suitable option.
What are ‘retirement villages’?
Retirement villages are special communities that cater to independent seniors and retired individuals who wish to make the most out of their golden years. These villages offer amenities and services that are typically out-of-pocket living expenses when availed outside of such arrangements.
But these communities aren’t for everyone. While many residents are satisfied with their lifestyles and experiences, most still agree that retirement villages can be a huge financial sting.
To help you decide on whether to move into a retirement village, consider some benefits and pitfalls below.
Benefits of living in a retirement community
Retirement village residents receive benefits that go beyond its fees. Some of these are:
- All-access pass: Residents usually have unlimited free access to premium facilities, such as swimming pools and libraries. You may also participate in prearranged outings and activities.
- Culture: You’ll have neighbours who are closer to your age and have similar interests. Living in a retirement community could offer the opportunity to immerse in your preferred culture.
- Improved health: Seniors may be vulnerable to rapid health decline due to a decrease in activities during their retirement years. But if you live in a retirement community, you’ll have access to a variety of facilities and social activities to keep your gears running and slow down physical and mental health decline.
- Longevity: You may take advantage of village facilities and services to have an active lifestyle. In turn, your lifespan may increase due to better health.
Pitfalls of buying into a retirement village
There are still negative perceptions about retirement villages in spite of resident satisfaction. Some usual complaints from former and current residents are:
- Fee structure: Retirement village fee structures are complex and confusing for most people. Existing regulations haven’t done much to improve transparency and this leaves retirees financially vulnerable.
The actual cost of buying into a retirement village depends on the operator, as well as the facilities and services offered. There are entry, upfront, recurring and exit costs to consider, but there’s no standard fee structure to base computations on. - Difficulty to exit: Another financial sting comes in the form of exit fees. Depending on the contract, you may be required to pay recurring fees until your property or unit is sold — even if you move out to receive constant care in a healthcare facility.
How to choose a senior living community
Finding the right retirement community and understanding the contract are critical because it can be financially crippling for retirees.
If you’re planning to enter one, you need to understand what you’re signing up for to avoid compromising your retirement savings. Seek advice from a legal or financial adviser who is knowledgeable about retirement village contracts.
More than an investment for retirement, living in a retirement village is a lifestyle choice that can be costly. Whether living in a retirement village is a good or bad idea depends on how well you understand and agree with the terms of your residence.
Explore Nest Egg to learn more about different retirement options.
