Check this table out to see how the exit fees range for different retirement village operators. There is also an example of how the calculator measures and calculates a contract.

This is a summary of actual contract terms from 6 different retirement village operators using the same price and time assumptions. There is also a copy of the calculator tool to show how the numbers are arrived at.

Comparison 6 VILLAGES

Primetime exit fee sample 5

The key points are:

Exit fees can cost over $200,000 after 10 years or more.

The difference from the highest to the lowest exit costs can be over $100,000. 

As well as this, exit fees typically cost significantly less per year if staying long term so you need to make sure you will be happy and don’t want to exit early on.

Some contracts are capped over a shorter period but take higher percentages early on so estimating the length of stay is important when comparing. 

As part of the Primetime planning system I developed a tool that could compare retirement village exit fees for different time frames. This is necessary as the contract terms vary significantly. As part of the testing I took six retirement village contracts and plugged the terms into the tool to make sure the tool could adapt to different terms.

It did work but the thing that was most amazing was the difference in fees that each village operator charged. Not only did they vary significantly but they also varied depending on how long a person stays. For example one village operator had significantly lower exit fees after 5 and 10 years but was the most expensive after 20 years.

As well as the exit fees the other key financial issues to consider are:

1. What would it cost (transaction costs) to sell my home and enter into a retirement village property?
2. If I free up cash on moving to a retirement village will this affect my age pension? For example a report indicates that a retirement village typically costs 64% of a home. That means 36% of the value of a home that is surplus will most likely end up in means testing after being invested.
3. How do the retirement village fees, charges and household costs compare to running my current home? Am I better off or will it cost me more each year?
4. How much would be left down the track if the retirement unit needed to be sold to fund aged care? What sort of standard of care could I afford?

If these matters are considered early on you are more likely to make the best choices both financially and from a lifestyle perspective.