Brochures may highlight the benefits of the luxury retirement village you have your eyes on. But will you be able to afford it and will it provide you with what you’ll need, asks Angelique Ruzicka.
If you pick up a brochure of a retirement village, you’ll typically see smiling pensioners talking to nurses, frolicking by the sea, exchanging loving glances at one another while playing a game of chess or getting a back massage at the local spa. They’re always happy and appear to be without a care in the world. But if you’ve put yourself down to live in a particular retirement village or if you foresee yourself living in such establishments, can you genuinely say that you’ve done adequate research into them to ensure that they offer what you’d need in retirement and whether you can, in fact, afford it all? If you aren’t careful, making the wrong choice could be costly. You may not be happy with the service, level of care being offered or the options available as your circumstances change. But you may be stuck with your choice as your life savings will often not let you make another move easily. Gerhard Kotzé, managing director of the RealNet estate agency group, warns pensioners not to be blinded by glamourous facilities offered by some retirement villages.”While many of the buyers currently considering a move to a retirement village
currently own their own homes outright, they will generally not have another chance to build that sort of equity, or accumulate their current level of savings, even if they continue to work full or part time for many years.”
He adds that retirees should make health their priority: “Consequently, their primary consideration should be to make provision for the fact that their health and mobility will naturally deteriorate at some stage – no matter how young and healthy they feel now. Many people in their sixties and seventies can also attest to the fact that life “accidents” such as heart attacks, strokes and even a bad fall can undo even the best-laid plans for an active retirement.”
Kotzé recommends choosing retirement villages that enable and encourage residents to stay independent as long as they’re able, but also offer several levels of stepped-up healthcare as they need them. “In short, they must use the funds they have available for their retirement housing to buy the most security of lifestyle they can afford.” The key to finding the right retirement village or accommodation that suits your needs (see box) is to plan early, because there’s a lot of demand and it’s only set to get worse. According to the World Health Organisation, the proportion of South Africa’s population aged over 60 will double to 15.4% of the country’s total population by 2050. The shortage of accommodation for the elderly means that, in many instances, people do not have a range of options to select from. “Waiting lists for retirement homes are often really long, and it can take five to 10 years before someone finds a place,” says Arthur Case, CEO of Evergreen Lifestyle. “This is why it makes great sense for people to research what is available in good time, and to put their names down on lists in advance of their having to make the move into a retirement village.”
Providers of accommodation include the state; nonprofit community organisations such as Durban’s Association for the Aged and the Cape Peninsula Organisation for the Aged; and property developers. The accommodation each offers differs substantially, based on income. Costs can vary considerably depending on the location of the retirement village, the facilities included, and the type of accommodation. “It can cost around R500 000 up to R4 million or R5 million. The buyer will also pay a monthly levy that covers a range of costs associated with living in the village, but may exclude some services, for example meals, a hairdresser, nursing, and so on, which is offered on a fee for-service basis,” explains Case.
Levies may also be payable even if you buy a home in a retirement village. These are paid to the body corporate or homeowners’ association that covers the control, management and administration of the place or scheme. “Different retirement villages have different facilities, but if there are more facilities on offer, it will usually mean that the levies are higher,” warns Pauline Sannasi-Pillay, a senior associate of Hogan Lovells SA. Your contract or documentation should contain provisions relating to fees or penalties applicable on certain events such as the transfer of land or unit if the occupant vacates the property, but these may not be so easy to find, so it’s important to peruse all the paperwork. You could be charged homeowners’ levies, retirement village association levies, healthcare levies, and for things and services such as nursing, meal vouchers, laundry, gardening, domestic workers and handyman services.
“It is advisable to compare retirement villages and the facilities available, as well as the associated costs. Always peruse the retirement village constitution, conduct rules and the contract relating to the housing interest,” says Sannasi Pillay.
This article was first published by City Press Business on 7 May 2017.