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The Hibiscus Coast is a popular place to retire and retirement villages flourish here. The numbers living in villages in New Zealand are expected to rise substantially – currently 12.6 percent of people over the age of 75 live in villages and by 2050 this is expected to double.
However, leaving the family home to move into a village is a financial as well as lifestyle decision and carries risks.
At a seminar held in Manly recently, the Commission for Financial Capability retirement villages national manager, Troy Churton, provided advice for anyone considering that move.
He told around 100 people gathered at Manly Methodist Church that due diligence – reading and understanding the thick wad of documents provided to potential village residents, including the small print – is vital.
Obtaining independent legal advice is mandatory before you sign on the dotted line, and it’s important to ask questions about anything you don’t understand, he said.
A key financial consideration outlined at the seminar is that most villages do not pass on a share of any capital gain on the unit – the payout on termination is usually the purchase price, less deductions of around 20-30 percent.
Potential residents also need to ask what may happen, and the costs, if they need to transfer to a care facility or serviced apartment, as the arrangements around this vary from village to village.
“Retirement villages are for independent living, but in the last few years the requirement for care has ballooned,” Troy said. “Although we are living longer, many of those years may not necessarily be healthy years and that needs to be planned for.” Currently 20 percent of New Zealanders aged 80 plus are in a care facility.
“When you look at a village, put on your ‘worst case scenario’ hat and think about how it would be if you or your partner were less mobile,” he said.
The Commission for Financial Capability (formerly the Retirement Commission) monitors the industry and also deals with complaints from residents.
Troy said that the most common complaint he receives is poor maintenance and repair at villages – although upkeep is included in the weekly fee that residents pay. This fee is an average of $124 weekly in the North Island. He advised anyone visiting a village they are interested in living in to look closely at the state of the infrastructure as many of the villages were built several decades ago and it should be obvious how well they are being looked after.
He said it is clear that the retirement village model works – both for the businesses that run them and for the majority of residents. “Moving to a village is not all about finances. It is about seeking security and peace of mind as you age.”
He said while requirements in The Retirement Villages Act 2003 provide a good level of consumer protection, the commission is currently seeking a review of the Act.
Before you move in…
Here are the Commission’s top tips for anyone considering moving to a retirement village: Make a list of the things you’d like in an ideal village, then visit different villages and find out what they offer. Talk to residents about village life. • Check that the village you’re interested in is registered and a member of the Retirement Village Association. • Consider what you might need in the future – especially in the case of declining health. • Ask if there are future development plans in the village that might impact on your preferred unit or the design of the village. • Read the Disclosure Statement and Occupation Right Agreement and make sure you understand them. • Contact an independent financial planner or accountant experienced in retirement villages and talk to them about the financial implications. Get independent legal advice. • Involve you family and friends in your decision. Material handed out at the seminar can be found at www.cffc.org.nz Another recommended source of information about decision making on staying at home, help for carers and rest homes can be obtained free by calling Seniorline: 0800 725 463.
