Why retirement villages and aged care are not substitutes
As adults we make choices about where we want to live, with decisions driven by lifestyle, work or family. However, as we get older these choices start to be impacted by health or increasing levels of frailty. And this may necessitate a change.
In our frailty years, where we live is not just a decision about physical location, it needs to give consideration to the access of care and support.
Homes come in a variety of shapes, styles, and legal structures. Planning ahead of time and researching the options are both critical to making a well-informed decision. It is important to understand what is affordable as well as how your daily routine can be managed.
Accommodation versus care
Older people needing access to greater levels of support may compare retirement villages against residential aged care services and view them as substitutes. While both provide supportive environments for older people, it is incorrect to view them as substitutes. The error comes from using the normal property comparisons of price and size.
For example, people may see that in a retirement village they have access to a whole unit or villa while for a similar price in a residential aged care service, they have only a single room.
When looking at accommodation options to support an increasing level of frailty, you should separately consider:
- The physical building that you will live in (accommodation)
- How you will manage the daily living activities (care and support).
Retirement villages versus residential care
Retirement villages offer the opportunity to live in a community of people 55 years of age or older. Maintenance of the external building and community garden areas is provided by the village operator. But it is still independent living.
In a retirement village you may be able to choose to access support and assistance inside the home, but at an additional cost. The services available vary from one retirement village to the next. You need to have the financial capacity to meet the costs as these care services are not subsidised by the government. You may, however, qualify for government-subsidised home care packages.
Residential aged care services bundle together fully supported living and care supports with accommodation. This care is provided 24/7 and is very heavily subsidised by the government. You need to have an assessment by an Aged Care Assessment Team/Service to access the government subsidies.
The table below provides a basic summary of some of the key comparisons:
| RETIREMENT VILLAGE | RESIDENTIAL CARE | |
|---|---|---|
| Entry (accommodation) cost | Set by the operator and specified in the residential contract. Usually a lump sum “purchase” but some options may allow a rental arrangement. | A published price which you can choose to pay as a fully refundable lump sum or a daily “rental” amount. |
| Tenancy right | Occupancy usually under a lease or licence arrangement. | Permanent tenancy for life, with any rules for moving specified in the agreement. |
| Centrelink /DVA means-test impact | Homeowner status depends on the amount paid. If determined to be a homeowner, the entry amount paid is exempt. | If a homeowner before moving, this status continues while a spouse continues to live there, or otherwise for the first two years only (or until the home is sold). |
| Options when leaving | Depends on the contract. If the unit is sold you may or may not share in any capital gains. A deferred management fee and refurbishment expenses are generally deducted from the refunded amount. | A refundable accommodation deposit (less any fees deducted) is refunded. All other rights terminate. |
| Cost of care | Optional services provided at the operator’s discretion – with commercial and non-subsidised pricing. | Rules for calculating fees are set by the government based on means-testing, with minimum and maximum annual fees. |
Aged Care Steps Pty Limited