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A little planning now will save a lot of hassle later

Retirement living, whether it’s within a village setting or in a suburban home, should be a comfortable and stress-free experience, especially when it comes to finances.

Research by consulting firm Mercer in October found though that many Australians aged 50 and over either underestimate the savings they require for their retirement, or underestimate their own life expectancy.

“We’re living longer but retiring earlier than we expect, which means more years to fund in retirement and less working years to save for it,” said Mercer’s David Anderson recently. “This disconnect could leave a gaping hole in our hip pockets in our golden years.”

Whether you want to stay in the family home, or downsize to a smaller home such as the units found in the more than 2000 retirement villages in Australia, some careful planning before and during your retirement can ensure you live the lifestyle you desire in the home you desire.

As the ASIC Moneysmart website advises, “the earlier you start preparing for retirement, the more options you have to set a course that suits you”. You will likely want to do many different things in retirement, such as extended travel, purchase a new vehicle, conduct some renovations on your own home, and continue in some part-time work or volunteering, all before considering the move to a retirement village, and it’s important to have the savings and income at every stage of your retirement for all of those things. Geoff Rimmer from Equity Trustees , the Retirement Living Council’s estate planning and wealth management partner, advises that a financially secure retirement “should be viewed as only the first step in a holistic planning process for retirement and beyond”.

“Other aspects not automatically considered are whether future generations are to be provided for, how this will be achieved, as well as the appropriate structures for this wealth transfer to take place,” Mr Rimmer says.

For those already in retirement who are looking for ways to find new cash, unlocking the equity in your own home and downsizing to a smaller, cheaper home is the most common method of obtaining some more liquidity.

Given the appreciation of house prices, it is not uncommon to unlock well over $100,000 during this process, but it is important to factor in the potential impact on your age pension under the age pension asset test arrangements. Use the Financial Information Service provided by the Department of Human Services ( to help you calculate the impact on your entitlements, and we strongly recommend seeking independent financial advice on your personal circumstances for the most accurate assessment on this.

It’s important to bear in mind, especially for those with decreasing mobility, the financial impact of maintaining your own home versus moving to a new home. Many existing family homes are not easily or cheaply adaptable to an older person’s needs, especially homes with stairs. A retirement village unit is purposefully designed for people with deteriorating mobility, with wide doorways, handrails in the bathrooms and no stairs.

With a potential move to a village or another home, bear in mind the cost of living in that local area, and your access to services and transport, which will have an impact on your week-to-week budget.

If you enter a retirement village, it is prudent to re-evaluate your insurance options too. In most cases, the retirement village contract will include home insurance, but not contents. Many insurance agencies will have specialised retirement village insurance products, and the insurance product you sign up to could well depend on the age you are when you enter the village – again, make sure to seek individual advice on this.

For long-term planning purposes, it can also be prudent now to think about any care needs you may have in the coming years, especially if you are managing an illness or physical complaint. It’s a difficult conversation to have, but it’s one that if had now can prevent stress and worry later in life.

“Aged care is a difficult conversation for families to have,” Geoff Rimmer at Equity Trustees says, “so the more that can be planned for, the more time can be spent on living and enjoying retirement.”

“Helping people to be prepared for when they need aged care, means the family is not left guessing about what they want and need.

“Another important consideration is end of life planning and power of attorney arrangements, in the event that people can no longer look after their own affairs through advancing age or mental incapacity.”

“With a potential move to a village or another home, bear in mind the cost of living in that local area, and your access to services and transport, which will have an impact on your week-to-week budget.”

Mary Wood

The Retirement Living Council is the only national organisation solely focused on advocating on the critical issues facing housing and services for older people, supporting and promoting members and the retirement living industry at large.

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Alana Lowes

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