Retirement: Definition
Retirement is the point where an person stops thier employment completely. A person may also semi-retire and keep some sort of retirement job, out of choice rather than necessity. This usually happens upon reaching a determined age, also know as the "retirement age", when physical conditions don’t allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings). The retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right or not. In many western countries this right is mentioned in national constitutions.
Retirement age
In most countries, the idea of a fixed retirement age is of recent origin, being introduced during the 19th and 20th centuries. Previously, the absence of pension arrangements meant that most workers continued to work until death, or relied on personal savings or the support of family or friends. Nowadays most developed nations have systems to provide pensions on retirement in old age, which may be sponsored by employers or the state. In many poorer countries, support for the old is still mainly provided through the family. The retirement age varies from country to country but it is generally between 55 and 70. In some countries this age is different for males and females. Sometimes certain jobs, the most dangerous or fatiguing ones in particular, have an earlier retirement age.
In Australia, while most view 65 as normal retirement age, many retire before then, sometimes with contributory causes such as job-loss, disability or wealth. However, the Social Security system has age 62 as the earliest retirement age. Normal retirement age for Social Security has historically been age 65 to receive unreduced benefits, but it is gradually increasing to age 67. For those turning 65 in the year 2008 full benefits will be payable beginning at age 66.
What is a Retirement Village or Community?
A retirement village, or active adult community, is a very broad, generic term that covers many varieties of housing for retirees and seniors – especially designed or geared for people who no longer work, or restricted to those over a certain age. The term is something of a misnomer because you don’t necessarily have to be retired at all. Entry is generally restricted to people who have attained 55 years of age or have retired from full-time employment, and their spouses. It differs from a retirement home which is a single building or small complex where no "common areas" for socializing exist. Many retirement communities are planned for that purpose, and have special facilities catering to the needs and wants of retirees, including extensive amenities like clubhouses, swimming pools, arts and crafts, boating, trails, golf courses, active adult retail and on-site medical facilities, one such example is Watermark Castle Cove Retirement Village. Other facilities have no or very few common amenities. An Age-restricted community generally requires at least one household resident to be 55 plus years of age or older (occasionally 50+ or 60+ years of age).
There are really three broad categories of retirement communities:
- ACTIVE retirement village (all residential units, no long-term healthcare facilities)
- ACTIVE/SUPPORTIVE retirement villages (a combination of residential and healthcare facilities – also known as "continuing care retirement communities" – CCRC)
- SUPPORTIVE retirement villages (all longterm healthcare units, like assisted living facilities or nursing homes)
Retirement communities are often built in warm climates, and are common in New South Wales and Queensland but are increasingly being built in and around major cities in cold climates too.
Types of Retirement Village
There are basically two types of retirement village: resident funded and donor funded. As the names suggest, a resident funded retirement village is essentially paid for by the resident, and the donor funded retirement village are usually operated by non-for-profit organisations funded by the Governement. This is not to suggest that non-for-profit are run by the Government, they are not, they still exist as private companies all drvien by profit taking. The size and style of retirement village accommodation varies enormously, from bed-sitter apartments to spacious brick and tile homes. Most retirement villages have common areas and a range of facilities available for the use and enjoyment of all residents.
Levels of Care
A number of terms are used to describe the level of care that is provided in a particular village or in relation to particular units. Units that are described as “independent living units” or “self-care units” provide the lowest level of care, although a range of personal services may be available on request on a user pays basis under an arrangement known as “flexicare”. Units that are described as “assisted living units” or “serviced apartments” provide the highest level of care, usually including the regular provision of a range of personal services.
Confusion sometimes arises because low level residential care facilities, previously known and often still referred to as hostels, sometimes also describe their accommodation as “assisted living units”. Hostels and nursing homes are regulated and partly funded by the Commonwealth Government and different legislation, admission criteria and funding arrangements apply.
Legal Structures
There are at least 8 different legal structures:
- Long-term lease
- Long-term license
- Strata title
- Community title
- Company title
- Unit trust
- Manufactured home
- Conventional lease
Different structures can have different implications and raise different issues in terms of applicable legislation, stamp duty, GST, service charges, responsibility for refurbishment and capital replacement costs, security of tenure, operator default, termination, vacating the premises, capital losses and credit risk.
Legislation
Each State and Territory has enacted specific legislation that regulates the operation of retirement villages. The legislation in each jurisdiction is different and has its own definition of what is and what is not a retirement village. In some cases the legislation applies differently to different legal structures and contractual arrangements. Particular legal structures and contractual arrangements may also attract the application of other legislation, such as strata title, community title, companies and securities, manufactured home or tenancy legislation.
Financial Considerations
Retirement village residents may be required to pay:
- an initial entry price when they move in
- rent and/or recurring service charges during their stay and perhaps beyond
- a fee called a departure fee, deferred management fee or exit fee when they leave.
The nature of the initial entry price depends on the particular legal structure. For example, it may be the purchase price of a freehold property, security or other asset, or it could be described as a loan, premium or prepayment of rent. No initial entry price is payable in the case of a conventional lease. Departure fees are particularly important and particularly difficult to fully understand. There are well over a dozen different departure fee structures and they are a key factor in determining how much you (or your estate) get back when you leave the village. Depending on your financial resources, how much you get back could well determine or limit your future accommodation choices. No departure fee is payable in the case of a conventional lease and may not be payable in the case of a manufactured home.