How to pick a retirement home

Published on 30th August, 2022 at 12:07 pm

Planning for retirement doesn’t begin and end with saving. If you’re planning to downscale and live in a retirement complex, you need to choose the right one to suit your needs. It can be daunting, which is why we’ve put together this guide to help you and your family make the best decision.

Reading time: 5 minutes

In this article you’ll find out about:

• Different retirement accommodation options available to you.
• Regulations of these living arrangements.
• The cost of various retirement accommodation options.
• How to financially prepare for the costs of retirement accommodation.

Ask yourself: what do you want out of retirement?

‘What type of lifestyle am I after?’
‘What options are available to me at my desired location?’
‘How long is the waiting list?’
‘How much does it cost?’

These are all important questions to ask when considering where you will live out your golden years. As you approach the final years of your career, it’s good to reflect and get the answers to some of these questions to make your transition the smoothest it can possibly be.

Alternatively, perhaps you’re not close to retirement yourself, but you could be asking these questions about costs and retirement venue choices for an older relative or friend. Whatever your reason for the search, here’s a breakdown of what you need to know.

Understanding the difference between sectional title and share block

With a sectional title, the investor buys a unit within a complex or development and obtains full ownership of that unit. “The body corporate, however, will be responsible for the day-to-day running and maintenance of the complex and communal facilities, and residents have to abide by their rules and regulations,” says Chris Cilliers, CEO and co-principal of Lew Geffen Sotheby’s International Realty in the Winelands.

As a member of a Share Block company you have a share certificate indicating your ownership of shares in the company and an agreement with the company in terms of which you have the right of occupation and use of the flat in perpetuity. You do not actually own the flat.

What is a retirement village?

These are popular with retirees looking to retain their independence while living in a secure and safe environment. Usually, retirement villages offer stand-alone homes of different sizes and configurations, garages/carports, small gardens, community halls for entertainment purposes, and various common areas (parks, gardens). Most offer medical facilities and services, and some villages also offer frail care facilities,” says Gavin O’Leary, property practitioner at Just Property in Port Elizabeth.

Life rights, explained

The purchaser buys the right to live in a house or unit for the remainder of their life. O’Leary explains: “The buyer never owns the property, and the life right transaction is not processed through the Deeds Office. Ownership remains with the developer. Life rights cannot be transferred and can only expire on the death of the holder.” It can be a complex model to understand, and the main downside to life rights is that they cannot be endowed in the passing of the life rights holder.

What is a full title?

If you take on a full title, it means you own the property. “The freehold section would normally be run by a homeowner association, and would be an easily sellable asset, as it is freestanding,” says Lawrence Homan, franchisee of Just Property Margate, Berea and Pinetown Westville.

Moving into a relative’s home

Instead of relocating to a retirement complex, you may be looking to move into a relative’s home. In South Africa, it’s not uncommon for grandparents to move into their children or grandchildren’s home in later life. If family do offer you the option of living with them, it’s important to have an honest conversation with them to discuss how the living arrangements would work. The expectations from both sides need to be discussed and agreed upon.

Find out, for example, what kind of support you can expect from your family members when it comes to medical care, and how your needs can be met by them. If they work full time or have a young baby to take care of, medical care may need to be outsourced to a nurse or medical practitioner that specialises in home visits for the elderly.

Also find out before moving in with family what they expect in terms of meeting the running costs of the home. Do they expect you to pay rent or help towards the bills?

Another topic that may be awkward to talk about is what would happen if you were diagnosed with a debilitating illness like dementia. Talk to your relatives about the possibility of this and what the family would need to do.

Make sure this is done in conversation with a legal expert and financial planner. Ironing out all these issues ahead of moving in with family will help to avoid heartache and arguments further down the line.

Have you considered the costs?

Costs are a big consideration that few think about fully. Waldette Stoffberg, a business development manager at Glacier by Sanlam, says costs of living in retirement accommodation can average between R10 000 and R15 000 a month. She adds that people tend to forget to account for specific costs, such as lifestyle costs.

“As you age, your medical needs may increase and you need to take that into account when planning your retirement. Electricity and transport costs have also increased with more inflation, and it is important to understand that, over time, inflation will be one of the biggest threats to a sustainable income in retirement,” says Stoffberg. If you’re worried about reaching your retirement goal, consider cutting these expenses.

A big expense, which can also be offered by your retirement facility, is frail care. According to the South African Financial Advisers Association (SAIFAA), frail care facilities can cost anywhere between R13 000 and R25 000 a month.

Remember that facilities with frail care often have long waiting lists because they’re in high demand, so if you anticipate needing these services in old age, it’s vital to get on the waiting list as soon as possible.

Being ready to retire comfortably has a major financial component. Use this retirement calculator to find out how much you would need to save monthly in order to reach your retirement savings goal and have the freedom of choice when deciding on your living arrangement during your golden years.