How to enjoy a luxury retirement

Written by James Jennings for Australian Seniors

The trend towards the ‘hotelification’ of retirement living, featuring vibrant, resort-style complexes and high-rise vertical villages in densely populated urban areas for those who prefer city life, has been on a huge uptick in Australia. For those who can afford it, we can now experience a retirement lifestyle that’s more akin to being permanently on holidays.

Steve Zappia is a founding director and CEO of Marchese Partners/Life3A, an international architecture and design firm founded in Sydney that specialises in retirement living developments featuring world-class amenities. “In the last 20 years, the market has gone from zero to a hundred,” says Steve. “When we designed our first retirement living project many years ago, the idea of a resort-style retirement village almost didn’t exist. Now we see them as more of a hotel-style resort as opposed to a 1980s-style, red brick retirement village.

“The majority of the projects in the sector now are moving towards that lifestyle-based resort experience, because the demographics are shifting,” he explains. “The people moving into these places are 65 to 75, and they’ve had amazing experiences in their lives, so their expectations and how they see their retirement might be different to someone who’s maybe 85 and pre-baby boomer. The market’s reacting to that shift, and so we’re delivering a much more sophisticated product now because that’s what people want.”

The design not only encourages socialisation among residents but also takes into account how cognitive abilities naturally decline over time. “We design our buildings to resolve some of the issues that come with cognitive decline but also design our retirement projects to create opportunities for interaction to eliminate loneliness and encourage community.

Related: Do you still need home insurance if you live in a retirement village?

“If you’re a 75-year-old couple moving into a new environment, you don’t want the design in such a way that to get from the car park to the front door means they don’t see anybody. It’s better if they automatically have to go through the lobby and engage with the concierge and go past the mail room, then all of a sudden they’re interacting with people and they’re not isolated. Understanding that is important.”

Another key draw of resort-style complexes and vertical villages is the incredible range of amenities they offer, which can include restaurants, cafes, wellness centres, gyms, indoor pools, day spas, wine cellars, cinemas, libraries, and a whole lot more.

“The point of these retirement communities is two aspects: they’re moving into a lifestyle and a community,” says Steve. “There’s options for you to do during the day and to interact with other people. It’s part of that whole process of creating a great place to be. When you go on a resort holiday, you spend time at the pool, you might go to the day spa, you’re going to go to the restaurant, so it’s like being on holiday, but living that life 24/7.”

More effort is also going into helping people future-proof their postcode by creating ‘continuum of care’ precincts, with many retirement living projects now featuring healthcare services on site. “What we’re seeing more of is the larger operators having the opportunity to build an aged care component into the precinct,” Steve explains. “That can either be a full aged care building with 50 to 80 beds, or it could be something that is more boutique – anything as small as 10 to 20 beds, so it’s more of a care hub. Once you provide the care services on site, then you can also bring care into the apartment.

“The beauty of that model is that it resolves many of the questions that residents may have about their future care needs, as there’s an on-site solution if somebody does have to have a procedure, or needs some ongoing care or if somebody does transition into a high-care needs scenario.”

Related: What every Australian should know about planning for retirement

Financial considerations when moving into a retirement village

Rachel Lane, co-author of Downsizing Made Simple and principal of Aged Care Gurus, recommends people look at contracts carefully before committing to buying into a retirement living community. “My background is as a financial planner who helps people to make these decisions,” says Rachel. “An exercise that I used to go through with my clients was something that I call ‘the ingoing, the ongoing and the outgoing’, and essentially looking at the cost of the transaction in those three buckets.

“Because when you don’t do that, people go, ‘Oh, that one’s $700,000, but this one’s $800,000. That one is cheaper. Right?’ Wrong. You’re just comparing one purchase price with another, and you haven’t looked at what it’s going to cost you to live there, and you haven’t looked at how much money you’re going to get back – and how soon – when you leave. I can’t stress enough that people have to crunch the numbers on these things.”

Related: How much money do I need to retire?

Finding the perfect fit for retirement

In terms of choosing the right retirement living option, Rachel warns against making the decision based solely on location or price. “No-one ever moved into one of these places where they felt like a square peg in a round hole and went, ‘Oh gee, it’s great because it’s cheap’,” she says. “It doesn’t work like that. You have to go to the open days and go to the happy hours before you make a buying decision. Don’t just buy it because it’s in the right spot and it’s got the right floor plan.”

Tom Symondson, CEO of Ageing Australia, the peak body for aged care providers, says its recent Community Expectations report indicates that interest in upscale retirement living is on the rise. “The research reveals that 30% of over 50s are interested in retirement living. That’s a huge proportion, and we don’t have anywhere near enough retirement living units for that 30% of people to move into one,” he says.

The demand for retirement living options

Many villages are sold before the last unit is built, he adds. “So that shows there’s huge potential interest if we can capitalise on it and provide the options that people want. I think people are absolutely enthusiastic for these kinds of options at every type and every kind of price point because so many people want to be able to downsize into something that is better than what they’re in now. It might be smaller but it gives them more lifestyle benefits, more access to community and more access to services.

“I think that retirement living is something that maybe not everybody considers because they might have a view of what it was like 30 years ago, or they don’t really understand it,” Tom adds. “But there are options for most people, whether it’s a high-rise or resort-style village or something in between.

“If what our research is telling us is true, that a large proportion of people do want to stay independent, but they want to downsize or they want to move into a communal environment, then that’s probably the only place you can do that. So it’s something that people should look at, and if they haven’t already, get onto it.”

Retirement living: Red tape unravelled

This is general information. You should seek appropriate financial, legal or tax advice specific to your circumstances.

Three main cost layers

Entry (ingoing contribution)

• The entry payment can vary depending on location and facilities
• You may buy (strata/freehold), or pay a loan/licence fee (you don’t fully own it)

Ongoing fees to cover

• Maintenance/gardens/staff/facilities (pool, gym, security)
• Insurance and administration: fees are typically a few hundred dollars per week (in some cases, these continue after you leave and until the unit is reoccupied)

Exit fees

• Charged when you leave (often 2-4% per year of stay), capped around 20-40% total, according to the Property Council of Australia

Contracts explained

The same village can offer very different financial outcomes, depending on the contract.

Freehold/strata title (you own the property)

• Can benefit from capital gains
• You pay purchase price, stamp duty (sometimes) and ongoing strata/fees, but may still have exit fees or selling restrictions

Leasehold/licence (you don’t own the property)

• This is the standard retirement village model in Australia
• You pay a large ingoing contribution (loan-like). When you leave you get money back minus fees
• Important considerations: exit fees deducted; you may not get capital gains; refund timing can depend on resale

Deferred Management Fee (DMF) model

• This is the fee structure used in most contracts
• Lower upfront cost
• Higher exit fee

Land lease lifestyle communities (you own the home, lease the land)

• Usually no exit fee & no stamp duty, but you pay ongoing site fees

Aged care

Costs are split into two segments:

1. Accommodation

• Refundable Accommodation Deposit (a lump sum)
• Partially retained (e.g. 2% per year up to 10%)
• Daily payment instead

1. Care fees

• Means-tested
• Daily fees plus additional services
• Much more regulated than retirement villages

You can weigh all your options before deciding on the most suitable path for your retirement plans.