Retirement Village Financial Trap

Retirement Village Financial Trap - The deferred fee, inflation, rising property prices, rising nursing home entry costs plus village exit costs will devalue over time the refundable amount due to a resident on exit from a retirement village.

This impact of the deferred fee, loss of earnings, inflation etc. on the amount to be refunded to a resident on departure from a village is something many will have to deal
with. A change in circumstances without further financial resources could leave a person in a financial position they did not envisage on entry.

Additional capital resources may be needed to meet the cost of any change in circumstances – ie: choose or need to leave the retirement village, re-enter the property market,
meet the cost of a nursing home bond to enable entry into a nursing home of choice.

The following graph shows how quickly a no u-turn situation arises when there is a steadily rising property market, the ability to make a u-turn because of a change of
circumstances diminishes as each year passes. Many retirement village residents enter a financial trap they did not see on entry as a result of the ever decreasing value of the
amount to be refunded on exit from the village.

This and further issues are discussed at http://www.retvill.net/

Legal and Social Issues Committee Recommendation 10

The Victorian Parliament’s Legal and Social Issues Committee enquiry into Retirement Living has made 15 recommendations.

RECOMMENDATION 10: That the Victorian Government make provisions to allow retirement village operators to pay either the refundable accommodation deposit (RAD) or daily accommodation payment (DAP) for residents entering aged care until the resident’s unit is sold.

The State Government is yet to respond to the recommendations.

Issues and concepts around Retirement Villages are presented at http://www.retvill.net/

LSIC Recommendation 14

The Victorian Parliament’s Legal and Social Issues Committee enquiry into Retirement Living has made 15 recommendations.

RECOMMENDATION 14: That the Victorian Government require retirement villages to report on compliance with maintenance plans funded by maintenance charges paid by residents.

The State Government is yet to respond to the recommendations.

Issues and concepts around Retirement Villages are presented at http://www.retvill.net/

LSIC Recommendation 6

The Victorian Parliament’s Legal and Social Issues Committee enquiry into Retirement Living has made 15 recommendations.

RECOMMENDATION 6: That the Retirement Villages Act 1986 and related regulations define whose responsibility it is to pay for repairs and maintenance, both inside units and in the communal area and facilities. These amendments should further require all works to be undertaken within a reasonable and mutually acceptable timeframe.

The State Government is yet to respond to the recommendations.

Issues and concepts around Retirement Villages are presented at http://www.retvill.net/

Potential Poverty Trap in a Retirement Village

Retirement Village Poverty Trap

The so named 'retirement village poverty trap' is where the $ value or your refundable amount on departure is so diminished over time by inflation, rising property prices and rising nursing home entry costs that it places you at a point where:-

1. You do not have sufficient money to leave the village and re-enter the property market.


2. You do not have sufficient money to enter a nursing home of choice, you have to rely on a government funded aged care placement.

See graphic below -

 

LSIC Recommendation 2

The Victorian Parliament’s Legal and Social Issues Committee inquiry into Retirement Living has made 15 recommendations.

RECOMMENDATION 2: That the Victorian Government review the Retirement Villages Act 1986. The review should determine the effectiveness of the Act in providing consumer protection while allowing growth and innovation in the sector.

The State Government is yet to respond to the recommendations.

Issues and concepts around Retirement Villages are presented at http://www.retvill.net/

LSIC Recommendation 15

The Victorian Parliament’s Legal and Social Issues Committee inquiry into Retirement Living has made 15 recommendations.

RECOMMENDATION 15: That the Victorian Government introduce a new alternative for low cost, timely and binding resolution of disputes in the retirement housing sector. This may be through a new body or by extending the powers of an existing Ombudsman.

The State Government is yet to respond to the recommendations.

Issues and concepts around Retirement Villages are presented at http://www.retvill.net/