Retirement villages: what do the new changes mean for you? 29



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There’s a curious interaction between your options when you enter a retirement village, and the changes to what’s known as the asset test taper rate used to determine your age pension payments.

At the moment, every $1,000 of assets that you have above the minimum asset threshold will reduce your age pension payment by $1.50 per fortnight, but from 1 January 2017 that will move to $3.00 per fortnight.

What this means is that any impact on your assessable assets will be twice as significant as before.

Under the social security laws, a retirement village interest is considered a ‘special residence’ and your entry contribution is an asset that is exempt from the assets test, when you pay over $149,000.

This is relevant because often when you’re entering a retirement village, you will have a choice of a number of different payment options. Usually, the higher the entry contribution that you pay, the lower the departure fee that applies when you leave the village (and sometimes down to nil).

So by opting for the higher entry contribution, you reduce the amount that you have to pay later as a departure fee, and potentially increase your age pension payment as well.

We’ve looked at one projected scenario where a couple had the following options to pay for their villa in a retirement village:


The couple were only selling their home for $450,000, so had to top up the entry contribution by withdrawing money from their super. Under the new (higher) taper rate, our estimates indicate they would be close to $150,000 better off after five years by making a bigger withdrawal from their super and paying the higher entry contribution, even when allowing for the investment returns they would no longer earn.

So it’s a really good idea to take advice if you’re looking at entering a retirement village. The numbers will change depending on your own personal assets and income, as well as the options for contributions that you’re able to negotiate with the village.

At $150,000 over 5 years – it pays to check this out first!

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

Michael Miller

Michael Miller is a Certified Financial Planner and Principal of MLC Advice Canberra. He has lectured and tutored at the University of Canberra in financial planning and economics. Michael is interested in money, human beings, and how the two interact. Financial planning is in his blood, his nan Zoe Miller made sure all her grandchildren's birthday cheques were indexed to inflation, in the name of fairness. You can hear more from Michael on Twitter (@MMillerCFP) or visit his website

  1. Never……retirement villages are Gods Waiting Rooms as far as I’m concerned….down size to a smaller home if needs be but to be surrounded by people all of the same age as myself, no thanks, I like to mix with people of different ages, it’s what keeps you young.

    4 REPLY
    • We have ages from 55 to 92 & most are very active & happy. We have now built a relationship with the local school which is very good. The students are learning knitting & they come & do performances or ask us over to their school for performances. It is what you make it. The best decision I made..

    • Good on you Margaret…I guess it’s what you want in your older years, I still want vibrancy and to keep learning different things.

    • No, I feel just the same as Sandra, there is still too much to do and to take part in, everywhere. I’d be concerned that I might become “institutionalised” if I went into one of those places. The ads on TV do nothing to convince me otherwise either – if what they show going on is the way of life there, its definitely not for me.

  2. Retirement villages are the entrance to hell. Once there are no babies crying, no teenagers skateboarding, no loud music, might as well jump in the casket headfirst because you are already dead.

    1 REPLY
  3. I like to be surrounded by life. Where we live now we are close to Ski Gardens on the river. The Showgrounds is 500 metres down the road. Major sports facility at the end of our street. Public Pool and another major sports complex 1 k away. Lots happening in our area. We love it. Street is a mixture of young families and retired people our age. Best of both worlds.

  4. Has any one got a good thing to say about Retirement Villages Or Residential Villages Or Caravan Parks they all differ please Advise Or InBox Me as to Down Size and have Some Money Over.

    5 REPLY
    • Margaret, I moved to an independent unit as part of retirement living/nursing home. Am totally independent, three bedrooms, garage under the main roof, in a street that looks just like a suburban street of units. I can access meals and help from the nursing home if and when I need to. I am 68 and while I am capable of looking after myself I come and go when it suits me. I pay a monthly maintenance fee. I bought the right to live here for as long as I want. Best move for me!!

    • I live in Western Australia we have lived in a lifestyle village being ages 45 upwards moved here when we were 59 such a good move for us life is wonderfull plenty of social things going on be as private as u want to be always a helping hand when needed couldn’t ask for a better lifestyle ,we have been here going on 10 years now and wouldn’t live outside ever again

    • We own the house but pay $150 a week that’s for two people have swimming pool indoor and outdoor tennis courts bowling lots of good things on hand ,if u r on a pension your rent is subsidised

    • Friends of ours, sold their house, bought a unit in a caravan park and spend a fair amount of time travelling. Not for me, but they seem happy.

  5. I love reading spurious advice like this – just draw $190.000 out of your super and sell your $500,000 house and no worries. What happened to helpful advice to all those people (mostly women) who have no house to sell, who have no or very little super or savings, and can be slugged legally by over 55 rental accommodation of 83% of their pension for a place to live with some water thrown in. and they have to pay their own electicity and telephone etc etc.- or be at the mercy of greedy commercial landlords who can’t be bothered to fix leaking toilets etc and still put the rent up regularly. ???

  6. My mother-in-law moved into an Aged Care Facility- with a $249,00.00 ingoing contribution. She absolutely loved the centre and we enjoyed visiting here there. The staff were/are lovely and a great facility overall.

    Sadly she died 6 months after moving in – two years ago – and the village has still not paid back the ingoing contribution – less $20,000 expenses they claim to the estate – claim they have to find another tenant first – and have been busy selling others but not ours. Any suggestions?

  7. Not something I would consider, I am happy with my independence at the moment. I see these concerns as money making businesses which means someone is paying a premium.

  8. Well my Husband Passed Away Over Five Years we Loved Travelling Around Australia So Much To See We built a New Home And About To Travel Again And He Passed So I’m At Loose Ends Just Looking At Options Things Change When On Your Own Unless You Have A 99 yr Lease They Can Sell C/Van Parks I’ve Heard And Ask You To Move Your Dwelling But Some Are Ok I’m in Victoria

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