If you've never lived in one, the idea of a retirement village can be a bit of a mystery. Do you own your home or rent it? What happens to your money when you leave? Who runs the place day-to-day? This guide breaks down how retirement villages actually work, from moving in to moving on.
The basic retirement village model
A retirement village is a purpose-built community for people over 55 who want to live independently, with the security of a supportive community around them. You live in your own villa, unit or apartment, but you don't buy the property outright the way you would a house. Instead, most villages use a licence to occupy or lease arrangement, which gives you the right to live in and enjoy your home and the village facilities for as long as you choose.
Alongside your home, you get access to shared facilities such as a clubhouse, gardens, community events and, in some villages such as at Ageing In Place Retirement Villages in Victoria, an on-site nursing home for higher levels of care.
Is there an entry fee to move into a retirement village?
Yes. When you move into a retirement village, you generally pay an entry contribution (sometimes called an ingoing payment). This is usually a substantial amount, comparable to what you'd pay for a property in the local area, but the arrangement differs from buying a house outright. In exchange, you get the right to live in your home under the village's contract.
Before entering into a contract, review the information statement for the retirement village. We highly recommend having an independent professional review the contract and explain it to you.
For example, these are the information statements for each of the retirement villages with Ageing In Place.
How do retirement villages' ongoing costs work?
Once you're living in the village, you'll pay ongoing fees, sometimes called service fees or maintenance fees. These cover the day-to-day running of the village: garden and grounds maintenance, building insurance, staff, and upkeep of shared facilities like the clubhouse. Some villages also charge separately for optional services such as meals or additional care.
How do the numbers work when you leave a retirement village?
This is the part that catches many people off guard if they haven't looked into it beforehand. When you eventually leave the village (whether that's to move elsewhere, transition into higher care, or as part of your estate), a deferred management fee (also called an exit fee or departure fee) is deducted from your entry contribution or the resale value of your unit, depending on the contract.
This fee usually accrues over your first several years in the village, often at a set percentage per year up to a cap. It's how many villages keep entry contributions and ongoing fees lower than they otherwise would be. It's disclosed upfront in your contract's Information Statement, so there shouldn't be any surprises, but it's worth understanding the exact figures before you sign anything.
Who runs a retirement village?
Retirement villages are typically run by a village operator or management team, responsible for day-to-day operations, staffing, and maintaining common areas. Many villages also have a residents' committee, giving residents a voice in decisions about village life, levies and improvements.
How On-Site Care makes some retirement villages different.
Not all retirement villages are the same. Some are purely independent living, with no pathway to higher care if your needs change. Others, including all three Ageing in Place Retirement Villages in Berwick, Carrum Downs and Mount Martha, include an on-site nursing home. This means that if you or your partner eventually need a higher level of care, you can transition without leaving the community, your friends or your familiar surroundings behind.
A typical day in a retirement village
Beyond the contracts and fees, day-to-day life in a retirement village usually looks like: your own private home and garden, a calendar of social activities and clubs run by and for residents, communal facilities like a clubhouse, library or bowling green, and the option to participate in as much or as little of village life as you like.
Questions worth asking before you sign a retirement village contract
- What exactly is included in the ongoing fees, and what costs extra?
- How is the deferred management fee calculated, and what's the cap?
- Is there an on-site nursing home, or would a change in care needs mean relocating?
- How are decisions about levies and village improvements made?
- What happens to your entry contribution if you need to leave the village?
For more detail around the types of questions to ask, read 10 Questions to Ask When Visiting a Retirement Village
See a retirement village for yourself
Reading about how retirement villages work only goes so far. Nothing beats an in-person visit to see the properties on offer, the grounds, communal facilities, and, most importantly, to get a sense of the community, the staff, and the feel of the retirement village.
You don't need to be 100% ready to make a move to book a tour. We understand the transition to a retirement home is a big decision, so doing your research early makes perfect sense. We also welcome the extended family when you tour one of our villages.
Book a tour at Berwick, Carrum Downs or Mount Martha to see the villas, meet residents, and ask these questions directly over a cup of tea.
