Retirement is your time to really enjoy your family, pursue the hobbies you’ve always yearned to try and take the holidays you dreamt of while stuck at work.
But the rising cost of living and the end of a regular, and hopefully regularly increasing, paycheque can make this a time of financial uncertainty for some older Australians.
The Association of Superannuation Funds of Australia (ASFA) calculates that retired couples aged 65 or thereabouts need to spend about $765 a week to live modestly – that means just a little above the basic lifestyle the Age Pension affords. If you want private health insurance, holidays, hobbies and new household goods, this cost goes up to roughly $1,175 per week.
That leads plenty of retirees to question how they may make their retirement savings stretch further, without pinching pennies and depriving themselves of life’s little luxuries.
One option that older Australians are increasingly considering is the prospect of moving to a lifestyle community or resort, which is typically less expensive than maintaining a large family home or moving into a retirement village and provides certainty on many costs of living – all with the additional luxuries of facilities such as gyms and pools, plus plenty of social activities with likeminded neighbours.
Halcyon creates lifestyle communities across south-east Queensland, which have won an award for affordability – so it makes a great case study for ascertaining whether such a community can provide the premium lifestyle many retirees want, while costing the same or less than a residential property or retirement village home.
At Halcyon’s resorts, the cost of a home starts at $409,000, well below the average Australian house price of $651,100. That cost difference alone can free up funds for a more enjoyable retirement, especially if you use the government’s new downsizing-for-super rule that allows you to ignore the usual caps on superannuation contributions and use the money to create an additional, tax-free income.
Retirement villages also have amenities similar to lifestyle communities, but they have the downside of coming with a hefty deferred management fee, also known as an exit fee.
Here’s how it works. Retirement villages charge you an exit fee to cover the cost of building the village itself, which has the advantage of allowing you to buy in to the village at a lower price than a comparable private home would cost. The downside, however, is that the fee is usually set at a percentage of the price the home is sold for when you leave the village, which means the you eventually lose a considerable chunk of your capital.
Not only is this money you may have preferred to use to fund a residential aged care place or leave as an inheritance, but you can’t always be sure of the final sum – unlike the fixed, regular fees that lifestyle communities charge.
The ability to offer great facilities without charging an exit fee isn’t the only financial benefit to a lifestyle community, Bevan Geissmann, Halcyon’s joint managing director, points out. The weekly fee also covers several common outgoings homeowners usually have to build into their budget.
“There’s no stamp duty on purchase, no sinking fund, no body corporate and no strata or community title fees,” Dr Geissmann says. “The weekly fee covers all management and maintenance costs as well as rates, water and government charges.
“And, unlike the retirement village model, you own your home, so when you sell it, you pocket all the capital gains.”
Lifestyle communities can offer these cost advantages because of the way they structure home ownership. In Queensland, lifestyle communities are governed by the Manufactured Homes (Residential Parks) Act 2003, which means you own your home in the community, but are leasing the land from the community provider, such as Halcyon. The ‘rent’ for the land is one of the items covered by your weekly fee.
Queensland lifestyle communities offer a lease in perpetuity, which gives you security of tenure, but because you don’t actually own the land your home sits on, it doesn’t attract stamp duty or council rates. And when it comes to selling your home, Halcyon residents have full control of the sale, with no requirement to use Halcyon’s services as an agent.
A lifestyle community can work even better money-wise if you’re eligible for an Age Pension rental subsidy, which is currently set at $68.60 a week for a single person and $64.60 a week for a couple.
Because you’re effectively renting your land within the community, the rental subsidy can be used to offset your weekly fee.
Lyn and Peter Brennan were initially sceptical of the lifestyle community model but changed their minds after seeing the positive experience their friends had when moving to Halcyon Greens at Pimpama, between Brisbane and the Gold Coast.
“Our friends are very astute people, they investigate things very thoroughly, so all the questions were already answered for us,” Peter explains.
“What we were always wary of was that there are so many operators that take a great deal of your capital when you go out and that doesn’t happen here. That got us interested straight away.
“There’s no way we were going into a community where they make you fit the home out before it is sold, they control the sale and then they take a big hunk of the capital gain.”
Since moving from their home of 43 years in Macgregor to Halcyon Greens in 2018, the Brennans have been won over as much by the lifestyle as by the financial benefits of lifestyle community living.
Keen golfer Lyn now regularly tees off at the neighbouring Gainsborough Greens Golf Course. “I can walk to golf and I’ve got free membership here,” she says. “It’s like a holiday, that’s the way it feels.”
Owning a low-maintenance home in a safe, gated community also means Peter and Lyn can now head off whenever they feel like it.
“At a minute’s notice we can lock the door and go and not have to worry about anything,” Peter says. “It’s not that much different to living in a unit but the quality of life is much better.”
Halcyon’s award-winning lifestyle communities are based on a simple and transparent financial structure that gives our homeowners more freedom and flexibility to enjoy the best years of their lives. Find out what you’re missing and open the door to a new way of living at Halcyon.