With Australians living longer than ever before, retirement planning is just as important now if not more than ever before. Planning for retirement can give you the comfort of knowing your future is under control and that you can do all those things you’ve dreamed of for all those years. Moreover, it can help in ensuring you (and your loved ones) are emotionally and financially prepared should your health deteriorate.
When planning for retirement, one of the biggest considerations you’ll need to make is your living situation. Knowing where and how you will retire well in advance gives you the time you need to adjust to a new way of living and ensure retirement will work for you. It can be helpful to include your loved ones in this conversation as you may need their help later in life. To avoid any surprises, you should consider all possible scenarios.
Preparing for retirement can be daunting and with so many things to consider, it can be hard to know where to start – but you don’t have to do it alone. To discuss your retirement options are and what costs are involved, we are joined by Retirement Living and Aged Care Specialist – Shaun Akroyd.
I’ve been helping Australians navigate the minefield of retirement accommodation options and aged care for several years. There are so many older Australians that are faced with so many options out there. Often, they do not know who to turn to to help them navigate this safely, as one wrong step can affect you financially and cause family arguments.
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Where and how you choose to retire is a personal choice, which is largely influenced by your ideal retirement life and your circumstances. Below, we explore a few common options, including staying at home or downsizing, moving into a retirement village or land lease community and transitioning into residential aged care.
Living at home
If you are financially and physically able, you might choose to live the second half of your life in your family home. Alternatively, you could downsize, relocate or move in with your kids (i.e. granny flat), freeing up more time and energy to enjoy your retirement. Moreover, retirees who sell their long-term home can contribute up to $300,000 to their super, funding their retirement and creating liquid assets for estate planning.
For some people, retirement living accommodation may not necessarily mean a move to a retirement community or land lease community. It could be downsizing or upsizing to the right property for that state of one’s life. Kids have probably (hopefully) left home, and they may be sick and tired of the time and cost associated with looking after the 4-bedroom family home on 800sq metres.
To learn more, read our article about the benefits of downsizing.
Retirement Villages and Land Lease Communities
Alternatively, or as the next step, you may choose to live in a retirement village or a land lease community. Village life is designed for people over 55 who can live independently in their own homes while enjoying the shared recreational and medical facilities on-site. It offers low-maintenance homes and it is often easier to make friends when living in a community with people the same age.
Conversely, in a land lease community, you own the house but lease the land (for 90 years). This can often be a more affordable option for retirees, with all the benefits of a vibrant community.
There are various ingoing, ongoing and outgoing costs and numerous legal contracts and although a lot of retirement communities look all the same, they are not. It’s all about understanding a clients’ goals, what they want to achieve and whether it’s achievable
To learn more, read our article on maintaining your independence: your retirement living options.
You might also be interested in our article on the costs of retirement.
Residential Aged Care
Retirement villages and aged care facilities are easily confused – but there’s a very significant difference. Essentially, they’re intended for different stages of life. While a retirement village offers a lot of independence (crucial to recent retirees), an aged care facility is equipped with greater levels of support for day-to-day care.
Entry to an aged care facility is restricted by need – you must be assessed as needing a greater level of personal care to move into an aged care facility. Co-located facilities share a site with a retirement village, meaning movement into aged care can be easier for village residents.
Depending on your risk tolerance and circumstances, you might consider purchasing an aged care annuity. This will provide you with regular payments for the rest of your life, regardless of what the share market is doing. However, this is not an ideal option for everyone and it is important to consult with your trusted Financial Adviser.
With Aged Care, this is something that for a lot of people just comes out of nowhere and they are generally not prepared and just stressed out. There is a lot of information out there which can be confusing.
I love helping my clients especially within the Aged Care space as it is such a stressful and emotional rollercoaster and such an important life event that can have massive positive financial impacts if advice is sought. We do all the legwork and provide advice on how much to pay towards the accommodation payment, how much ongoing and what all the fees will be.
Don’t leave it too late to have an honest conversation about aged care options with your loved ones. To learn more, read our article on how to start the conversation about aged care.
Remember, this is a personal decision based on your ideal retirement lifestyle and your circumstances. You need to consider the effects on your cash flow, Centrelink/DVA entitlements, superannuation, retirement income streams, estate planning and more. Moreover, you need to know whether you are entitled to low-level care at home, or higher levels of care, and what you will have to contribute.
I advise to have these conversations with a Financial Adviser. The earlier you start thinking about this the better!
Your retirement can look a number of different ways. Sit down with a trusted Financial Adviser to determine how and where you’ll retire. To start the conversation, reach out to Invest Blue today!
How much super could you have and how long could it last? Use this calculator to see how you are tracking against your lifestyle objectives once you’ve stopped work.
How can Financial Advice help?
When planning for retirement, there’s a lot to think about! What level of care will you need – and when? What lifestyle do you want – modest or comfortable? What living options are available? What can you afford? Do you need to downsize?
My role is to take the stress away. I want my clients to spend more time with their loved ones, rather than stressing over all the information available and then how to decipher this information. This is an emotional, financial decision for most people – and emotions and finances are not a good mix!
From my experience, loved ones who don’t plan ahead are often pushed into a corner and make unwise decisions that, had they had time, would probably not make the same decision again.
There are so many things to consider, and your retirement can look a number of different ways. The good news is, a trusted Financial Adviser has the experience and professional contacts to assist with these difficult decisions – helping you to determine where and how you’ll retire.
At Invest Blue, we can help you:
- Identify your goals – what are your plans for the second half of your life?
- Prepare for the lifestyle change
- Review cash flow/income requirements
- Put plans in place to make your money last in retirement
- Maximise government benefits
- Review your health/house/care requirements
- Review your estate planning
If you would like to discuss your options and how you might manage it from a financial perspective, speak with a trusted Financial Adviser today.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.