If you have been struggling to compare the costs of different retirement villages, help may be at hand with a new online calculator.
Available on the website, the free calculator takes the complex range of fees (entry, ongoing and exit fees) and calculates a simple ‘equivalent monthly rent’ for the years of residence.
It enables consumers to easily compare the costs of different retirement villages, according to Dr Tim Kyng from Sydney’s Macquarie University.
Dr Kyng said he developed the comparison calculator after a frustrating experience helping his mother choose between retirement villages.
“Consumers should be able to obtain key cost information in clear language when they are first looking around,” Dr Kyng said.
“As an expert in complex financial products, I didn’t expect to struggle to analyse retirement village contracts. I found great variation in the entry fees, ongoing fees and particularly the ‘deferred management fees’ or exit fees across the retirement village industry.”
Users of the calculator will need to input the retirement village’s entry fee, ongoing fee and outgoing fee, as well as information regarding the sharing of profits or losses on the resale of their apartment. The calculator then analyses this data to provide the user with a comparison rent per month.
“Most retirement village contracts are very complex arrangements,” Dr Kyng said.
“Many consumers think it is like buying your own apartment. It usually isn’t, and you don’t own it. Residents only have the right to live there until they become too sick, voluntarily relocate, or die.
“It is difficult and time-consuming to get the details of how the contracts work and even more difficult to compare one with the other.
“In fact, some operators in NSW demand a $1,000 deposit for the privilege of looking at a contract. They will give you the money back if you decide not to proceed, but it really inhibits comparison shopping.”