Eighty one retirees residing in eight retirement villages ? four in New South Wales and four in South Australia ? were interviewed as part of the Australian Research Council (ARC) Seniors? Living Project, a study investigating seniors? accommodation choice. A summary of findings has been prepared in a working paper entitled Financial planning for retirement village living: A qualitative exploration.
The results were based on a content analysis of the responses to the question ?were there important financial considerations in choosing your current living situation?? ?Of the 81 respondents, 29 either had no financial problems or did not mention such issues.
The remaining 52 respondents mentioned one or more financial issues and consequently formed the sample for the following analysis.
The respondents were grouped according to income and the results were analysed across the three groups: self-funded retirees, part-pension retirees and full-pension retirees. The 52 respondents included 28 females and 24 males. Thirty-three were married, 14 were widowed, 1 had a partner and the remaining 4 were single or divorced. Their ages ranged from 55 to 89 years with an overall average age of 76.3 years.
Financial considerations of retirees before moving to a retirement village
The sale of the family home provided the most agreement among the groups. More than one third of each group (5 of 13 self-funded retirees, 6 of 18 part-pension retirees and 7 of 21 full-pension retirees) agreed that selling the family residence was necessary to fund the purchase of the retirement village unit.
Maintenance fees was another area of agreement between the three groups, although both pension groups were more anxious about the rising costs of recurrent charges than self-funded retirees, whereas self-funded retirees were more concerned about how the recurrent charges were being spent.
The issue of affordability was directly related to income (30.7% of self-funded retirees discussed this compared with 33% of part-pensioners and 40% of full-pension retirees). Having a financially comfortable retirement was also important and four of the respondents revealed that they had chosen to purchase a retirement village within their budget rather than at their preferred location.
Superannuation was more widely discussed amongst the part-pensioners (8 of 18), in contrast to 2 of 13 self-funded retirees and 6 of 21 full-pensioners. It?s apparent that because part-pensioners supplement their superannuation with part-pension payments, they are the most volatile group in terms of income. Interestingly, the issue of deferred management fees (DMF) was mentioned only by the self-funded retirees (7 of 13).
Discussion and conclusions
The need to sell the family home and have enough money left over to enjoy a ?financially comfortable retirement? were important considerations for all three groups of residents (self-funded retirees, part-pensioners and full-pensioners) and remains a key ?sticking point? before seniors make the decision to relocate to a retirement village unit.
Unsurprisingly, self-funded retirees failed to identify affordability as frequently as both pension groups; however, they were the only group to mention DMFs, which could indicate the different priorities between self-funded retirees (SFRs) and both pension groups as the SFRs most likely have more disposable income and hence more freedom in their choice of retirement village. Related, SFRs were also less concerned about the rate of increase in their recurrent charges but more concerned about how their recurrent charges were spent.
What makes this qualitative study unique is the fact that the findings attempt to understand seniors? financial considerations before making the decision to move into a retirement village, as opposed to the other studies in this area (albeit still too few) which have focused on pre-retirement decisions.
A full report will be available on the members section of the web site over the coming months.
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