Sunday, 3 June 2018

Retirement Village Poverty Trap

There can be a dramatic impact over time on the $ value of the refundable amount (in-going cost minus the deferred management fee) repayable to the resident on departure.

The impact arises from -
- Inflation
- Rising Property Prices
- Rising Aged Care Costs
- Rising Interest Rates
- Costs associated with a retirement village not generally associated with a residential lease - maintenance, refurbishment, administration.

This impact has the capacity to create a 'poverty trap' for some residents should they choose to leave the village to re-enter the property market or need to meet aged care costs.

retirement village poverty trap

Industry data shows 41% of retirement village residents receive no share from the village operator of the appreciation in property value which may have offered some protection against the above situation.

The higher the percentage of lifetime savings used to enter the retirement village, the higher the likely hood of the resident being trapped into their current situation and unable to change direction without family assistance.

There is no legislative protection for retirees from this so named retirement village financial/poverty trap.

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