Retirement village vs aged care

What is the difference between aged care and a retirement village?

In an aged care residential facility, which used to be called a nursing home or hostel, care  is provided to the residents according to their needs and it is included in the cost together with meals and most other living expenses.  Retirement villages are primarily independent living units meaning that it is for people who can live independently and do not need care.  It becomes confusing because some retirement villages provide meals and have some sort of care available, usually at additional cost.  Most retirement village agreements have a provision in them saying that if your care needs increase, you can be asked to leave.

What is the difference in cost?

An aged care residential facility is subsidised by the Australian Government.  Because it is subsidised, you need to be assessed as eligible i.e. assessed as needing care.  Most elderly folk who are struggling on their own at home will qualify.  Being subsidised does not mean it is free – you have to pay if you can afford it but you only pay what you can if you have low means.  In aged care you pay for the accommodation (like buying a house) either by paying a bond or rent type payments (unless you are low means) and you pay for care and services.  If you pay the bond as cash, you get it back when you leave the facility.  The amount you pay for care and services depends on your means and on whether the particular facility provides extras.

Retirement villages are not subsidised.  You pay an entry fee (like buying a house or apartment) and you pay a monthly service fee. What you get for that monthly fee depends on the village.  When you leave, most retirement villages take a percentage of the sale price – and this could be as much as 40%.   You also usually have to pay the monthly fee for a while after you vacate the village.  We say to our clients that retirement villages are not an investment decision – they are a lifestyle choice.

So what is appropriate for you?

If you need help with your daily tasks (meals, hygiene, dressing) then an aged care facility is probably more appropriate.  If your only issue is loneliness, then a retirement village could be the better choice.  If you are struggling at home or over 85 then you should be very cautious about moving into a retirement village.  Whilst a retirement village might look suitable, they can very expensive as a short term option, mainly because of the deferred management fee.  Some retirement villages have aged care facilities on site but understand that you will have to pay separately for the aged care facility and that the retirement village cannot guarantee that you will get a bed in the facility when you need it.

How do you tell the difference?

The easiest way to tell the difference is to ask the sales person ‘Are you an aged care residential facility or a retirement village?’.  If they say neither, they are probably an SRS (supported residential service) which is something altogether different.

If you are still confused or need help sorting through the options, call us on 1800 744 676 or email us at

Until next time

Sara and Margaret

Leave a Reply