Things to Consider in Buying into a Retirement Village
It is important to get a lawyer or advisor to read the contract of the retirement village you are considering buying into. The retirement village operators are required by law to give you the contract and disclosure statement twenty-one days before you sign. Seek advice about the village you are considering. It is also a good idea to speak to the residents or family members of the residents.
Be aware of the retirement village financial models, such as deferred management fees and other extra charges. Retirement village units cannot be bequeathed to the family members in a will, and many will not allow visitors to stay in the units. Further, the operators of the retirement village may force you to move out if you are deemed to be no longer able to care for yourself independently. It is vital that all people living within the unit are listed on the title, otherwise if both of the residents are not listed in the contract, the remaining person may be forced out of the unit if their partner dies, or is forced to leave the unit; for example, to go into a nursing home.
Finally, if you do not understand something in the contract- do not sign it and seek legal advice.
How Much Do You Need in Retirement? Consider Aged Care Costs.
When calculating how much you need in retirement, you need to allow for aged care costs in your thinking. We are living longer. In about 1965, the average person retiring at sixty-five would live seven to eight years after retirement. Today, you need to factor in a possibility that you will live twenty to thirty years after retirement. In your later years, you may need residential care, or support in the home.
The cost of aged care has been continually increasing, even faster than the rate of inflation. Due to the average person living longer, there is a good chance that we may need some sort of care as we get older. Whilst some government subsidies can help to reduce these costs, in order to obtain a higher level of care, some savings will help to improve the type of care and facilities you may want.
It is important that you factor in the cost of aged care when calculating your retirement needs, otherwise you might find yourself running short in retirement.
The Australian Economy is forecasted to have strong growth in 2018. Business investment, other than the housing and mining sectors, should show strong growth- with particular strength in the export markets. The labour market and good household incomes will help sustain private consumption. Wages are expected to pick up and an increase in inflation is set to occur gradually.
With inflation showing signs of growth, the Central Bank is forecasted to start raising the interest rates in the second half of 2018. The rising interest rates forecasted are starting to cool the housing market, which has been getting overheated.
The government’s fiscal policy is sound, in that they are helping to close the budget deficit.
The long period of low interest rates has fuelled house prices, especially in the larger city metropolitan areas. The rising house prices has created high mortgage borrowing and resulted in households being highly indebted.
The positive side of the rising house prices has seen a population movement to regional and coastal areas along the Eastern shore line, both north and south.
World Economic Growth
The International Monetary Fund (IMF) has raised its forecast for global growth to 3.7% for 2018. The Global Recovery has strengthened. Among the advanced economic growth in the third quarter of 2017, was higher than projected growth in Germany, Japan, Korea and the United States. Developing economies, such as Brazil, China and South Africa, showed stronger growth than expected in the third quarter of 2017.
World Trade is showing good productivity increases in recent months, and a strong pickup in investment, particularly among the advanced economies. The release in the new smartphone models has resulted in an increase in manufacturing in Asia.
The stronger growth in 2017 is expected to flow into 2018 and 2019, with global growth possibly reaching 3.9% for both years. This is a 0.2% hike in comparison to the forecasted rate of 3.7%, and can be mostly attributed to the growth in advanced economies.
The US tax reform and associated fiscal stimulates in recent times has raised US growth. This growth has helped countries close to the USA, such as Canada and Mexico.