Should retirement village residents be able to buy now, pay later?

2 hours ago 3

Opinion

November 26, 2025 — 5.11am

In retirement villages, choice is supposed to be at the heart of the experience – choice of community, lifestyle and care. Yet, when it comes to how residents pay, many villages still offer only one option.

Increasingly, operators are recognising that isn’t good enough. Many – big and small, for-profit and not-for-profit – now offer residents a choice: pay the management fee upfront or pay it at the end. The question is, should that choice be mandatory?

Aged care can be difficult to afford, so it’s important to give retirees as much choice as possible.

The logic is simple. Any time you buy something today but pay for it tomorrow – or in 10 years’ time – it costs more. Sometimes a lot more. Not giving people the option to pay upfront starts to feel a little like forced finance.

It’s the retirement-living equivalent of being told you can only buy a new car if you take out a finance contract with the manufacturer. You might be happy to, but you shouldn’t have to.

Let’s put some numbers around it. Imagine a retirement village unit priced at $850,000 with a 30 per cent deferred management fee. Under this model, you pay $850,000 when you move in, and when you leave – whether that’s in five years or 15 – the operator deducts 30 per cent of the entry price. That’s $255,000.

Now imagine being offered a choice: instead of paying a 30 per cent deferred management fee at the end, you could pay a 20 per cent management fee upfront. That means paying an additional $170,000 on day one. For some people, that upfront payment is too steep. For others, it represents certainty, value and potentially substantial savings.

Payment flexibility isn’t a nice-to-have; it’s a necessity.

Why? Because how you pay for your retirement village unit doesn’t just influence what you pay the village – it influences what you receive from the government.

Paying the fee upfront can reduce your assessable assets. For people receiving the age pension, that can mean a higher pension payment. For every $100,000 your assets exceed the threshold, your pension reduces by $7800 a year. Paying $170,000 upfront instead of $255,000 later could mean you receive $13,260 a year more pension.

It doesn’t end there. Under the new Support at Home program, the way your assets are assessed will affect how much you contribute to your in-home care. Choosing to pay a management fee of $170,000 upfront could reduce your support-at-home contributions from $17,000 to $8500 a year.

Then there’s the longer-term picture. If you need to move into residential aged care where the timing and size of the refund from your retirement village can make a big difference. Of course, the benefits need to be weighed against the fact you don’t have access to the capital or what it earns.

There is no one right answer – and that’s the whole point. People’s financial circumstances differ. Their pension status differs. Their health and care needs differ. Their plans and priorities differ.

Payment flexibility isn’t a nice-to-have; it’s a necessity. If retirement living is genuinely about choice, then offering at least two payment options shouldn’t be exceptional – it should be expected. Perhaps it’s time to make it mandatory.

Rachel Lane is the author of Downsizing Made Simple, a book and website aimed at demystifying downsizing.

Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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