How to live well and retire well
Posted on December 05, 2019
When Donald Swanborough from the Alteris Financial Group spoke to a room full of people at Beauty Point Retirement Resort last week, he outlined how they can plan for their retirement so they’re comfortable and certain about their financial future for all of their senior years.
Mr Swanborough is the Training & Development Manager for Lifestyle & Care with the Alteris Financial Group based in Sydney. He’s presented talks like this to a large number of people about to retire and he obviously enjoys it because he admits he’s in this category as well – or as he says, he’s – a ‘Seenager’!
He explained what a Seenager is: ‘I am a Seenager (Senior Teenager). I have everything that I wanted as a teenager, only 60 years later. I don’t have to go to school or work. I get an allowance every month. I have my own pad. I don’t have a curfew. I have a driver’s licence and my own car. The people I hang around with are not scared of getting pregnant and they do not use drugs. And I don’t have acne. Life is great.
Mr Swanborough then went on to explain it’s important to choose a retirement village earlier rather than later because then you can enjoy your life as a ‘Seenager’!
“If you start the ball rolling and sell your family home,” he said, “this will release the capital you have tied up in it. There are a number of correct ways to deal with this capital such as downsizer superannuation contributions which can often mean you’re still eligible for the pension or part of the pension,” he added.
Mr Swanborough emphasised it’s a good idea to downsize whilst you’re still physically able to handle it all easily: “There’s a great deal of information and surveys which show that the people who move to a retirement village are happy they did it,” he said. “In fact, the most common thing people had to say when they completed the McCrindle Baynes Survey from 2013 was: ‘We wish we’d made the decision to move to a retirement village sooner.’”
“Nine out of 10 village residents said if given the choice again, they’d make the same decision,” he added. (from McCrindle Baynes Research).
Another survey with similar results is the 2018 National Survey run by Villages.com.au with nearly 20,000 residents in over 529 villages. Here are some of the findings from this survey:
• 27% of residents said their physical health had improved
• 39% of residents said their mental wellbeing had improved
• 37% of residents said their financial security had improved
• 51% of residents said their satisfaction & happiness has improved
A golden opportunity missed
Despite all of this information being available, Mr Swanborough said most people leave moving to a retirement village until later and by this time, they often have high-care needs and instead need to move into residential aged care: “Many people stay in their home too long and as homes do, they become difficult to manage and maintain. Once people have safety and mobility issues, anything can happen such as a fall or they can experience isolation,” he added.
Costs and financial considerations of living in a retirement village
Mr Swanborough detailed how the fees and costs are set up in a retirement village. He added that while there is a level of consistency as retirement villages must comply with the Retirement Village Act, every village is different so it’s best to seek advice about your plans in this area to make sure you’ve calculated your costs correctly.
The three main costs were outlined as: the ingoing purchase price; the ongoing recurrent charge and the outgoing Deferred Management Fee (DMF – this is the capital gain sharing, refurbishment and selling costs.)
But Mr Swanborough added you should allow for the fact you’ll need to set aside some spare money for your regular living expenses (electricity, food, travel, entertainment) and possibly home care fees.
No nasty surprises in a retirement village
Additionally, Mr Swanborough pointed out the charges you’ll incur with a retirement village charges are much more amenable than what you can come up against when you buy a strata property: “For example, in a retirement village, the replacement of capital items is the responsibility of the village operator so there are no nasty surprises. As well, the operator cannot make a profit from the recurrent charges – this is set by law in the Retirement Villages Act,” he added.
“In a strata building, you have to contribute to an administrative fund to cover the outgoings of the Body Corporate as well as a sinking fund for ‘anticipated’ maintenance of common property. But if there are unanticipated problems such as water leaks, structural cracks, concrete cancer etc, these can result in nasty shocks via special levies – something that couldn’t happen in a retirement village,” he said.
No need to miss out on the pension
“Many people think they’ll be unable to receive the age pension if they sell their home and move to a retirement village,” he said but this is usually not the case: “The majority of retirement village residents receive the age pension. Forty-four per cent of retirement village residents get the full age pension 38 per cent get a part age pension.”
“Village operators are now introducing innovative pricing options to assist new residents to move in and retain their pension benefits. Many people are eligible for the Commonwealth Seniors Health Card and this can help them with their expenses,” he added (For more on eligibility for this card see here.)
“As well, many people qualify for the Commonwealth Home Support Programme but they don’t know about this. You only have to be assessed by the Regional Assessment Service, be 65 years or older and live at home or in a retirement village. If you qualify, you can receive domestic assistance, transport, food (meals on wheels), home maintenance and modifications, community support and allied health services,” he added.
What can a specialist retirement village advisor like Alteris offer?
Mr Swanborough said Alteris can assist buyers to make an informed decision based on facts: “We prepare a report showing the buyer’s income, the ingoing, ongoing and outgoing costs under various purchase options as and when applicable for up to five years,” he added.
“We look to maximise social security entitlements and medical and pharmaceutical concessions. We explain the pros and cons of downsizer superannuation contributions and other financial strategies to help boost income when social security entitlements are negatively impacted – such as gifting, funeral bonds etc,” he said.
“We explain the Commonwealth Home Support Program, Home Care Packages and Aged Care Advice. It’s important you get advice in these areas because for example, if you want to make a downsizer contribution to your super when you sell your home you are able to do this – and the government has increased the amount to $300,000. But you must make this payment within 90 days of the date of settlement of the sale of your home,” he said.