TEITR 423 : Mitch Hiam
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Veronica: ~Although just for the editor at the end of the last episode, I did say next episode, we've got a financial planner coming on, and we don't, we've got Mitch, he's not a~
CB: ~Yeah, that's what I was just thinking as ~
Veronica: ~Um, so please cut that from the last episode. But if you can truncate that little bit I said about what's coming up next week and take out, we are interviewing a financial planner even better. Um, so we've still got something, but don't call and find planner. All right, here we go. Smiling for the camera. Here we go.~ [00:00:00] In this episode, we explore the financial realities that sit underneath retirement living decisions, the ones most people don't confront until they're forced to. We look at why so many Australians stay in the family home for far longer than planned.
Veronica: How rising maintenance costs and care needs quietly change the math and why doing nothing is often the most expensive option. This conversation today will tackle the questions. Many retired homeowners and their families are already asking, but rarely get clear answers to.
Veronica: [00:01:00] Our guest today is Mitch Home Chief Operations Officer of Balance Financial Group, whose work focuses on helping people navigate the financial side of retirement and aged care. We've experience across pensions, home care, downsizing, retirement villages, and intergenerational arrangements. Mitch helps unpack how recent policy changes and funding structures are influencing real world property decisions and what people need to understand more before making irreversible choices. Mitch, this is gonna be a very important discussion. We are so glad that you're joining us today. Welcome.
Mitch: Thank you for having me look forward. I'm looking forward to it. I'm excited.
CB: There's so many ways we could start this conversation. I think, um, you know, and if you haven't really gone through parents and it's often the, ~you know,~ kids of the age, you know, the parents 'cause they've got to an age where they probably put it off. what are just some of the real challenges you see [00:02:00] when you know, I guess the parent or the surviving spouse of your, you know, your, mom or your dad's still here, or like it's so much to deal technically, and emotionally for them as well to actually make this happen.
CB: ~Um, ~how do you guys play a role there?
Mitch: Yeah, definitely. So we get people coming to us from at all different,~ uh,~ aspects of their life where usually we're dealing, where we deal with the kids when potentially their care is at a stage where they're not able to look after themselves anymore. ~Um, ~but a lot of people come to us earlier on in the piece when they're, when they're still quite healthy. But they're trying to plan for the future. You know, they're in two story houses or,~ um,~ their partner has passed. Their house is too big. ~Um, ~you know, their kids have moved away and they're looking at moving closer to the kids. So we see all different ranges. ~Um, ~and for us it's about looking at the options that they have available to them. And so, ~um, ~if they are looking at smaller homes, it's, it's comparing the options for them. If it's looking at retirement village, which is completely different to downsizing into a smaller [00:03:00] home,~ um,~ or even sometimes they're looking at doing renovations in their current home so they can live there as long as possible.
Mitch: And I think to be brutally honest, what most people want to do is stay in their homes for as long as possible. No one wants to move into residential aged care. And,~ um,~ unfortunately the biggest issue with,~ uh,~ residential aged care or nursing homes is 77% of the people moving into residential aged care or nursing homes. It's not by choice. It's because they've had a fall, a medical incident, a stroke, and so they don't really have that choice and they don't have,~ uh,~ the right,~ uh,~ supports in place to help them stay at home for as long as possible. I.
Veronica: That's fascinating because we seem to. It seems to be that most people assume that they'll just work it out later when it comes to retirement, uh, living. And I guess that's risky from a financial perspective, but also I guess you've got a lack of choice. If you, uh, 77% are moving in sort of under duress, that means that they've left it to a point where they don't have the luxury of time.
Veronica: And I [00:04:00] guess time equals choice, doesn't it? When it comes to these decisions. Is that a fair, statement?
Mitch: Yeah, definitely. And one of the biggest things that I do is I go out and do a lot of presentations for retirement villages and, uh, probus groups, just trying to get as much information out there as possible so people understand the current processes of the systems. Like at the moment,~ um,~ one of the biggest things that the government has changed recently was the,~ uh,~ legislation for residential aged care, but also for home care. And so people think, oh, I can just a apply for home care when I need it. But currently the wait times are astronomical. So people wait until they've had an incident, they go to hospital and they say, oh, I'd like to apply for,~ uh,~ home care. And they said, that's okay. There's a three month wait, and then you've got a further 12 to 18 month wait to receive funding.
Mitch: And people say. Oh wow. Long time. So your option then is, do I pay privately or do I go into residential aged care, or does the family come and help out, you know, move mom and dad into your home? So it, it just depends [00:05:00] on the situation and, there all the things that we, we try to speak to people about if we can try and get as enough information out as possible,~ um,~ so people can stay home.
Mitch: ~Um, ~and my biggest thing I, I tell,~ uh,~ retirees is apply early. As soon as you start to see that your care needs are declining, start applying. Yes, you don't need it right now, but you may need it in the future. And,~ um,~ we have so many people think, oh, actually I might start you know, doing that now.
Mitch: But I think with that generation,~ um,~ they're very tough and very stubborn and so they don't need help. ~ um,~ you know, but at some stage everyone will need help. And it's about having it available if you need it.
Veronica: one thing that sort of stands out to me super clear there is that if you are, and we'll be talking about the sandwich generation, that is sort of people roughly my age who have got elderly parents, in fact, very elderly parents, usually eighties and more. ~Um, ~also we've got kids that are dependent on us still, so we're. Why they call us the sandwich generation. And if I had to think that all of a sudden I'd be required to also care for my elderly parents while I'm still caring for my [00:06:00] kids, I'd be thinking, mom, dad, go and go and start applying. I, there's a, a 12 to 18 month waiting list up with a three, month,~ uh,~ application process.
Veronica: You know what I mean? We are almost two years. I want you applying now. I know you don't need it. And so I guess depression needs to come from those that might actually be,~ um,~ forced to deal with the consequences. So that's, that's really stark it. I know it's probably a completely,~ um,~ inappropriate comparison, but it reminds me of when I was about to give birth and I knew that I wanted an epidural and it's like, don't leave it too late.
Veronica: 'cause then you might not be able to have one. So I went into the hospital going, I'm having one, so just send the anesthetist my way. So it's a little bit that same sort of approach. I think, you know, I'm gonna need help, so let's just get in before I need it.
Mitch: Yeah. And we have so many people come to us and say, I wish I'd known about you sooner, or, I wish I'd known about this. and I think that's the biggest thing we try and do. Yes, we're a financial company, but I see us more of a, a helping company, even though we are there for the finances, it's about trying to give as much information as possible.
Mitch: And unfortunately, I don't think the government does a great [00:07:00] job at advising what people have access to and,~ um,~ you know, processes that are available to people. So if we can kind of get out there and give that, then at least people know when it comes to that stage or if they have a friend or a loved one who is going through that, at least they know who to turn to or where to start the process.
Mitch: I think that's the big thing.
CB: So Mitch, like, ~um, ~you mentioned at the start, everyone wants to stay at their home. ~Um, ~you know, 70, 70 people in, 77% of people in age care retirement villages, you know, wasn't the choice. It was due to a lot of different reasons. So, ~um, ~even, you know, most of those don't want to be there. They want to be back in their old homes, and so.
CB: With home care,~ um,~ and people wanting to do it anyway. And the system's structured that way from, you know, tax free growth on their home and you can get the pension, all that sort of stuff. Like if you had to extrapolate out the next 20 years, which I think that part of the population's got a lot of,~ uh,~ people aging.
CB: ~Um, ~do you see that really, like, and the way that even with home care, like, is that really the future? Like everyone's really just gonna stay in their homes and, you know, by doing so, [00:08:00] then those properties will basically never come on the market, for example, because they're, they'll just never sell 'cause they'll just stay there.
Mitch: Look, I think how I see the market changing, if anything is I think people will s. Are to look at downsizing like into smaller properties. So yeah, look, you've got some people that, you know, if you look around, most new builds are two story, right? ~Um, ~when you get to an age, some people can't go upstairs anymore.
Mitch: So I, or the, you know, the big five bedroom homes, the kids have all left. I only need a two bedroom now. You know, my partner's passed or whatever it may be. ~Um, ~I think people will be going into smaller. So I think people getting into smaller homes,~ um,~ all retirement villages, that's the alternative because it's not residential aged care.
Mitch: You still have independence in a retirement village. ~Um, ~but when I'm speaking to a home care company, the biggest thing, uh, the biggest service that they said most people use is for gardening and maintenance. Now. In most metro areas, the gardening,~ uh,~ backyards are getting smaller and smaller, so [00:09:00] hopefully it won't be too bad for those people.
Mitch: But a lot of our older generation now, they're on six, 800,000 square meter blocks. ~Um, ~and now under the new change for home care, as of the 1st of November, it's now called support At home is the home care system. Look, there are some benefits to it and there are some,~ um,~ bad, not bad sides, but things that, that they have to improve.
Veronica: Can we talk through what has changed?
Mitch: Yeah. So what's happened previously, home care was always income tested and, ~uh. ~There were long wait lists for,~ uh,~ home care. As I stated, it's almost two years at the moment, and the government has kind of stepped in and said, we wanna make a change. We, we need this to be better. They have now made support at home.
Mitch: I'll, I'll still call it home care, but,~ um, uh, ~under the new home care system, it is now means tested, so they're assessing assets and income. ~Um, ~but previously under the old home care system, the biggest thing was you were given a package of x amount of dollars. There were four different packages, and the top one was, I think it's [00:10:00] about 62,000.
Mitch: Level four was about $62,000 worth of funding a year to use on whatever you wanted. The biggest issue that we had
Veronica: It's more than the pension.
Mitch: Now the, the biggest thing with the, the home care,~ uh,~ the level four package, which was the biggest one,~ um,~ is you could use the funding on whatever you wanted. ~Um, ~and so a lot of people either didn't use the package or would try and save it up for certain items.
Mitch: You know, they needed an electric wheelchair or they wanted to do a ramp into the home. They would have to save their money. So this is why the, the wait time blew out for home care because you've got all these people that either say, ah, no, I don't need it, or My son's helping me pay for things. So now the government has kind of stepped in and said, well, what we're gonna do now is we've now got eight levels of funding with the maximum being $78,000 a a year. But they've broken it up into quarterly budgets. And so if you don't use your quarterly budget, you can only transfer a thousand dollars or 10% of that quarterly budget to the next one. So what this means is if you don't use it, you've lost it [00:11:00] for that quarter, but it's now just not sitting there. Someone else can now get access to that home care package and the funding. And so the goal for the government. They say they want the wait time to reduce from that 12 to 18 months down to three by November, 2027. But let's see what happens. So that is how they've changed,~ uh,~ the eight packages that they've got. But what they've done now is they've broken home care up into three different categories of services. So they've got allied health, which is for if you need any help with nursing,~ uh,~ physiotherapy, speech pathology,~ um,~ that is one aspect. Then you have two other categories. One is independent and the other one is everyday services. So, ~uh, ~independent is for assistance with like for a carer if you need help getting ready in the morning, in consonants, et cetera. And then your final,~ uh,~ category of services is for things like meals. Gardening, maintenance,~ uh,~ trips to the shop. And so what the government have, introduced is [00:12:00] under the allied health category, any Australian, whether you're a full pensioner, part pension, or a self-funded retiree, you do not contribute a cent. So the government is covering all the care costs of things, but ~uh, uh, ~for all the non-medical costs, allied health costs, you now have to pay a contribution. And it is dependent on your means test,
Veronica: Right. So therefore, before you potentially could have had your house maintained and garden done, all the rest of it at no cost to you. Now if you, uh, have you know, access to funding, you now have to contribute or co contribute to those nonclinical services.
Mitch: even as a full pensioner. And this is.
Veronica: that's gonna change things, isn't it?
Mitch: Yeah, definitely. And this is where I think, because look, it's, this is how I think it's gonna come, what it's gonna come down to as a full pensioner look, they might be,~ uh,~ asset rich because they bought in a, area when Sydney prices were very, very low. the property has grown massively. ~Um, ~and they're just living off a pension. They don't have anything else apart from the property. So now they're living off, [00:13:00] 1,178 a fortnight off the full pension. They only have, after their groceries and their insurance and everything else, they've now gotta decide whether I pay 17 point half percent of the cost for gardening or mowing, or do I potentially look at spending my money on something else?
Mitch: I need food or something like that. And I think potentially those people in large gardens or, you know, big properties, it's gonna, it's either gonna be, what's more important? Is it my safety? Or, the funding, like the, the money that they have to spend, I guess.
Veronica: Well that, I mean, it will put financial pressure on them to sell the home. So before, like you were saying that, you know, you could be asset rich, cash poor, but it basically you're own your own home and you're just on the pension and you live fairly frugally, you know, you can just stay there for as long as your health keeps up.
Veronica: Right. And your mobility. Right. But, if you now you realize that you can't keep on top of what is required to keep that house and the, the garden or the, the grounds in a presentable form under control is probably, [00:14:00] you know, particularly the gardens then that could well then start to put the idea of selling and downsizing or perhaps moving into retirement, living earlier in.
Veronica: I mean, maybe that's the whole point of the government's, um,
Veronica: change.
Mitch: Well, I, the, the biggest thing is what they're trying to do is, like in some areas of Australia for residential aged care, for nursing homes, there is no vacancies. If you head up into southeast Queensland, there is a big wait list, massive. And so, ~um, ~even in parts of New South Wales and even other states as well, there's just a backlog.
Mitch: There's so many people in hospital,~ um,~ and not enough beds. So they need more to be built. Yes, there are homes building, but they can't build quick enough. And so the purpose of, I guess, home care was to try and make sure people could stay at home longer. Is it gonna be in their current homes they're in now? Maybe not. it's, it's a difficult one. And so I think, look, the government looking after the,~ uh,~ the medical aspects side of things, I think is fantastic. But the, the non-medical, ~um. ~That's where people are gonna [00:15:00] have to decide, what do I do? And even people have started to find little cheats around the system.
Mitch: So like, self-funded retirees. ~Um, ~instead of using the home care package for the independence, uh, services, they've just been going private, so it's a little bit cheaper. And so, and paying privately for it. So there's little loopholes that we've seen people start to find, and I think the government's gonna make changes.
Mitch: But even under the,~ uh,~ independence,~ uh,~ category, there's things like, as I said, it's for things like,~ um,~ helping you get ready in the morning and showering. And,~ uh,~ I know David Pocock, the old Wallaby, he's down in Canberra and he's working very hard on it,~ um,~ to make sure that The rights of Australians can still get showered for nothing. They don't have to pay a contribution towards that. So I still think there's a,~ uh,~ a work, they're still working on it. It's not a hundred percent perfect, but I think, um,~ um, uh, ~hopefully I think it will be for the better. But I, I think it is gonna kind of force people to, to look at alternative options if they can't afford to pay for these maintenance and renovations or,~ um,~ you know, for gardening and upkeep in their current [00:16:00] homes.
Veronica: I'm curious to know whether you've seen a sort of a change in, in people coming to your business for assistance in this as in the wake of these changes? It's funny 'cause over the years, you know, I've been now in real estate for 26 years. You know, I started off as a sales agent. We quite often would sell deceased estates and I was often horrified at the state of repair that elderly people have been living with, like dangerous stairs and, and like, you know, God, I mean, back in the day, you know, you'd have these, the old hot water heater that's sort of in the bathroom above the bath, you know, like really primitive in many cases.
Veronica: And you see these beneficiaries come outta the woodwork and it's like, wow, where were you when the old person was still alive and they needed some help around this house? 'cause the house has been falling down around their ears. So. It seemed to be, and that's we're talking about 20, 20 years ago now.
Veronica: Right. ~Um, ~but even when, you know, I look at my own grand, my grandmother and also my own parents, as they've got older and they, you know, the things that they used to be really house proud [00:17:00] about, they, they stop worrying about, they, they, they eyesight start going, you know, they get cataracts and all the rest.
Veronica: They don't see things, they don't, you know, like some people are quite happy to sort of live in this decay, this, this slow, decaying environment. And other people are like, no, I, I don't want to, I, I really want to get into a newer, cleaner, easier environment where I'm not burdened by this, ~ um,~ responsibility to maintain a property. Are you seeing that people are starting to come to you and saying, I can't do it anymore? Or is it not making any difference yet? I don't know. What, what's the feeling in the ground from you?
Mitch: like it's always, it's always been the same way. It hasn't changed since the new legislation has come in because I think the biggest thing for the legislation, especially for home care aspect of things, was people were just rushing to try and get the home care package previously and people are still awaiting the home care packages. Look, a lot of people have family to assist and. As I mentioned before with residential aged care, it's usually the kids that say, you know, mom's not coping anymore. Dad's not coping. To be brutally honest, [00:18:00] our busiest time of the year is Easter and Christmas. ' cause they go to pick up mom and dad to bring 'em to their house for Christmas.
Mitch: They walk inside and they say, oh, there's dishes out. Mom was never like that. What's going on? They notice there's a big change. But look, age care is further down the track. Age care on the average age at the moment is 83 for a male and 85 for a female. And so it, it's a fair way down the track. But in regards to the maintenance of their current homes and where they're living as they're getting older, I think,~ uh,~ touching on the maintenance bit that you said, there was a bit of research that we did in regards to, um, maintenance in, within a home across Australia is most people spend roughly between one to 4% on maintenance of their property each year. 1% is for people that,~ uh,~ have houses less than 10 years old.
Mitch: And if you've got houses over 30 years old, it's about 4% per year. And so that's an extra cost. And as you said, as you get older,~ um,~ it's so hard to, like some of those old seventies bathrooms, they've got step in baths or step in showers. [00:19:00] it's not suitable anymore. And this is where people's care needs start to decline massively because they're not showering, they're getting sick.
Mitch: There's all these aspects of things, um, or people aren't visiting. So, going back to what I said before with, the, that older generation, ~um. ~They're really proud. They're, they're too proud to ask for help, to be brutally honest. So we only get the people who are preemptive and they're saying, look, the house is too big at the moment.
Mitch: I don't wanna like, I wanna move, I wanna look at something else. ~Um, ~so we're looking at a smaller property look and, and the conversations I have with people in regards, because they come to us and they say, should I go a retirement village or smaller home? And I said, it's all up to you. ' and I push people away from a retirement village If a, you are within a couple of years of needing residential aged care because there's a cost to move into a retirement village. ~Um, ~and if you are recuses and like to stick to yourself, there's no point paying for a retirement village because you're paying a fee for being in a community. So if you're not gonna interact with it, it's not worth it. You may as well find a smaller property where your maintenance is lower. ~Um, uh. ~you know, it's accessible for [00:20:00] yourself.
Mitch: So you can stay there as long as possible. You can still get your home care now with a retirement village, or they have different names, like over 50 fives, independent living units, retirement villages, they're still independent. You can still get home care within there. you don't have to do any maintenance 'cause the village does it. ~Um, ~and that's where we really have those conversations. For those people who are proactive and starting to look as, that's some of the comparisons we're looking at is, okay, well your maintenance on your current home, it's 30 plus years old. You are, you know, on a million dollar house, you are paying $40,000 a year just on, you know, upkeep and maintenance on
Veronica: Or it's declining ' cause they're not paying that money.
Mitch: exactly. ~Um, ~and so potentially it's looking at, okay, what's gonna be better for me? And look, everyone's goals and outcomes are gonna be different. ~Um, ~and so we we are just trying to help find the best outcome for those individuals.
CB: Mitch, from my understanding, you know, on the home care is that, you know, aged care is really expensive, right? It's full. There's not enough work. There's all of the aged care, sort of royal commission [00:21:00] from my under, you know, and so the government doesn't really want that 'cause it costs them a lot of money and so hence why we've got these home care packages.
CB: But they realized that maybe it was too broad. So then they've dialed it back just to health and yeah, maybe they're not doing the general per a lot of personal care and then maintenance and cleaning it and stuff around the house, but it's all your health is fine, then that means that then they'll probably still wanna stay there, right?
CB: Because they, that's what they ultimately wanna do and if they can afford to stay there, right? So they either get their kids to help, the kids might have to contribute, they'll use all their savings, but then the government's then got this reverse mortgage scheme that they say, Hey, oh, this is your final option is just access this home equity scheme, which is very attractive.
CB: 'cause this will allow you to stay in the home. Like, is, is that your view on what they're really trying to do? Because putting him down the age care isn't really, you know, a cheaper option for them on the, their sort of financials
Mitch: No. And so look, some of the full pensioners will be able to apply for a hardship, but there's [00:22:00] certain criteria, so you have to have under certain amount of assets or income. And so some of those full pensioners will be fine because they can apply for hardship or they might need assistance to apply for hardship.
Mitch: And there's, you know, organizations like OPN and a few others out there that can assist. ~Um, ~but that's where with the retirement villages, this is where I think the retirement villages will really start to push,~ um,~ and become a lot more popular is, as I mentioned before, there was the three categories.
Mitch: Your clinical, your, your independence, and your every day most of the services under every day. ~Um, ~under home care is what a retirement village provides to you. They have a bus that takes you to the shop, they do your maintenance. If anything breaks, they come and fix it. So a lot of those things that you pay for it, and that's where I think potentially people will go the retirement village option.
Mitch: But I understand what you're saying. In regards to the,~ um,~ will it push 'em towards residential aged care? I don't think so, because look, to be brutally honest, a lot of people didn't use, not a lot of people, a lot of people did use home care previously. Now that there was a big push and there [00:23:00] was gonna be a big change, a lot of people wanted to apply for it. ~Um, ~yeah. Is it perfect? No. ~Um, ~but yeah, people are gonna really have to look at what options are available under those. ~Uh, ~contributions,~ uh,~ categories, and I think that's where a lot of like retirement village companies are now gonna start implementing. Well, how about we offer food because they have affiliations with aged care companies.
Mitch: You know, like Uniting Anglicare,~ um,~ they have retirement villages and aged care. So they'll say, well, how about we organize meals? So now if someone's in our village, we've got all their maintenance covered, we've got all their, you know, all the,~ uh,~ their shopping when they go to the shops. But now if they need meals, we'll cook for them and we'll do it for like $5 a meal. So now it's cheaper than going through the Home Care package. So I think it's gonna change the Retire Village and, and potentially the home care side of things as well. The,~ uh,~ currently we're in a, a limbo stage of support at home as well is,~ uh,~ 'cause it was introduced on the 1st of November. The government is letting every home care provider charge whatever they want for different services. But as of the 1st of November this year, there will now be price [00:24:00] caps. So everyone will cha charge should be charged in the exact same. Amount for the exact same service, where previously you could have different companies charging different amounts for gardening, mowing, whatever it may be. So, um, I, I, think it's slowly gonna be a work in progress, but,~ um,~ yeah, we're starting to see,~ um,~ yeah, I, I think people know that, that they don't want to go into aged care. ~Um, ~and so yeah, moving in with kids, the other thing that is becoming a lot more popular,~ uh,~ potentially now is the kids are talking to the parents because,~ um,~ and saying, what about if you move in with me and there's a, a popular topic over the last couple of years, it's called a, a granny flat,~ uh,~ agreement, or a granny flat, right, where it allows the parent to gift, property or proceeds of sale to the children without affecting pensions. ~Um, ~so they can sell the home and gift some or if not all of the proceeds to the children. ~Um, ~they can transfer the ownership of their current home to the children. ~Um, ~they can [00:25:00] sell their current home, the parent and purchase a property in their children's name. ~Um, ~but in return, the children is giving them a right to occupy in either the child's property or the property that's being bought. And,~ um, uh, ~it can't be foreseen that people need residential aged care in the next five years. ~Um, ~but we are starting to see people start looking at what alternatives that they have earlier in the piece. I think that's the biggest change we're starting to see is people looking at, do I stay at,~ um,~ do we look at moving in with my daughter giving her funds?
Mitch: Now for a granny flat right or agreement, you actually don't have to build a granny flat. A lot of people think, oh, I have to build a granny flat in the back of my home. If you don't, you can actually have a spare room for them in your home. It's in return. You just have to give them the right to occupy. So I think that could potentially be an option. And, and, and certain ethnic groups obviously do that really well already. ~Um, ~you know, we're, we're a multicultural country and it's fantastic and we see that with, you know, a lot of diverse,~ um,~ backgrounds where, you know, they take care of their parents first.
Mitch: They bring 'em into their house or, you know, they, they put them first. So [00:26:00] potentially maybe we might see a bit of change in regards to that and, you know, bring 'em into the home. But they're also getting a financial benefit as well. So they've now got no debt potentially.
Veronica: So for listeners that are sort of interested in this topic and you haven't listened to last week's episode, ~uh,~ we interviewed a lawyer and we talked quite a bit about,~ uh,~ the granny flat phenomenon, if you wanna call it that. Um, certainly the legal aspects of retirement living decisions, particularly for the sandwich generation who are actively trying to help the parents out under these sorts of arrangements. I'm curious though, Mitch, how should retirees be thinking and actually their kids as well Now, you know, now you're bringing that in. ~Um, ~be thinking around the financial trade offs between downsizing, retirement villages, staying put with care, maybe amalgamating resources and, and living with family, but also in mind.
Veronica: ~Um, ~and maybe I'm entering and it's another question, but anyway, I've heard the term inheritance in patience. ~Um, ~I don't know if I heard that term from you when we were [00:27:00] talking, you know, last year or if I heard it from somebody else. There's, you know, because you've got the, you've got the parents' decision making, which may or may not be impacted by co you know, cognitive,~ um,~ function as they get older.
Veronica: ~Um, ~but you've also got a generation that standard benefit financially from the decisions that are made now. And they may not necessarily be always in the best interest of the parents. You know what I mean? There's a bit of a conflict inherent there. Can we talk to some of that?
Mitch: yeah, we see that all the time when, when we sit down with someone in the first 10 seconds, you can see if they're in it for their, for their best interest or for their parents' best interest. ~Um. ~And with the downsizing aspect of things, as I said, with the, when we're dealing with the individuals, they're looking at themselves.
Mitch: They're like, look, we're selling our property. We're gonna have X amount left over. So we're looking at the retirement village. What are the different options in the retirement village? ~Um, ~can you help, you know, compare the different contracts? 'cause there's different ownerships, there's different room prices, they're all gonna affect them, their pension, their tax,~ um,~ or a bunch of different things that it can [00:28:00] affect. ~Um, Uh, ~so when we speak to them,~ uh,~ the, the parents per se, they're just worried about themselves. Now, sometimes we are getting people start to say, well, we've got this money left over. We wanna start looking at helping the kids. And everyone's different. And this is where obviously we can't do a blanket approach for everyone.
Mitch: We really need to understand what they're trying to do. ~Um, ~some people who are self-fund retirees and have enough money to, to live off, they're like, well, I've got this spare money. Can I gift it to my kids? Can I do this to help out,~ um,~ while I'm still alive? Why don't I help them? Why do they have to wait?
Mitch: till I die before I help them? We also need to discuss with them, well, these are what your costs are gonna be if you need residential aged care in the future. So make sure you just don't give it all away. Or, you know, if you give your money to your kids and they run off, then what are you gonna do?
Mitch: You're stuck. Make sure you can still get some assistance. ~Um, ~but yeah, we do find, look, I think we worked out the numbers. It's like close to 77% of the people when they're placing their loved one into residential aged care or, or they're at that stage. Most of them say, look, it's mom's money. It's dad's money. If we get [00:29:00] less fine, we just want them to have the best life possible. The other 30% are like, well, look, I'd like to try and keep as much inheritance as possible. And to be brutally honest, you'd be out of your right mind if you didn't try and reduce costs with anything in life, really. ~Um, ~so if you can try and keep help, reduce costs because that will then keep more of an inheritance. But unfortunately moving forward, everything is means tested, residential aged care, home care. So it, there is gonna be out-of-pocket expenses,~ uh,~ one way or another. So it's about looking at how much is it gonna cost, what can I do to prepare for it. ~Um, ~some people wanna try and give away all their assets before they get to a certain age.
Mitch: So there assessors having nothing. Nothing. And I said that's good in some aspects, but it's very hard to find homes as someone, as a supported resident. So they don't have any assets or assets less than 63,000. ~Um, ~and so, ~uh. ~Or you might not get the nicest time. So, ~um, ~it, it depends on the individual, but yeah, we're really seeing that people want to have that conversation and prepare for that future.
Mitch: We're we're, [00:30:00] that's probably the biggest thing we're seeing over the last year, you're saying? Well, look, I think the kids are getting involved early and noticing signs and saying, what should we do? Like, what, how can we plan for the future? And the best thing that we can currently do at the moment is saying, start with home care.
Mitch: That's your number one ticket to try and stay out of age care for as long as possible. Then we can discuss retirement villages, downsizing, you know, what's mom's situation, what does she want to do, what does that mom and dad want to do? ~Um, uh, ~and then it kind of just leads from there,~ uh,~ what options we have available.
Veronica: I'm on a personal mission to help more people make better property decisions. You know, most people don't realize that they can cost themselves hundreds of thousands of dollars over the medium to long term when they make property decisions without all of the information that they need. And what I do is help people with tricky real estate problems, which offer masqueraders simple questions like, should I sell my investment property because the interest re payments are hurting, or should I buy before I sell?
Veronica: Or the other way around. You could connect with me and access all of the tools that I've created to help [00:31:00] you make better property decisions at Veronica Morgan dot com au. And there you'll find resources for first home buyers, details about my buyer's agent mentoring program. You could connect with my Sydney based property management and buyer's agency teams, Australia wide vendor advocacy.
Veronica: Or ask me for introduction to the small group of buyer agents that I would personally recommend across the country. That's Veronica Morgan dot com au.
Veronica: If you're considering a property move, which is buying your first time, upgrading, renovating, or investing, the team here at Alcove would love to help you think through your decision and get the finance right.
Veronica: Please go to cove.com au to reach out.
CB: Mitch, what do you think the age is though, where it starts to get a bit hard? Like so for example, is it, you know, there's like a window, right? When you sort of feel fit and healthy, you feel adventurous, you're willing to try, you know, try new things and make new friendships. And then there's a point where that sort of does decline and then all of a sudden the chance of wanting to just stay in that home for the rest of your life obviously increases a lot.
CB: Right? [00:32:00] And so like. There's this window of downsizing and then there's a point where it just downsizing just feels like too much. And you know, I feel like, you know, particularly in this place like Sydney, right? Where the grandparents, well the, you know, 70, 80-year-old for example, now lives might be a completely different part of Sydney.
CB: The kids live and then definitely even the grandkids and ~um, ~you know, their friends and networks and all that sort of stuff are around this sort of pocket. They know the street, they know it feels so safe. So like staying at home is obviously a real preference for them moving in with the kids, takes 'em away from all their networks often, and it potentially, which kids do you move into?
CB: You know, you don't want to bird them. So just trying to think like, it's often we, you know, if you, if you miss that window and then a lot of those downsizes do miss the window because they've got kids coming there and those kids haven't bought a property, so they, they wanna hold onto their home for as long as possible because the kids are in apartments.
CB: So it's kind of like that all the factors sort of force people just to sort of stay ~ um,~ Do you agree with that?
Mitch: Yeah, to an extent, I think we're seeing a lot more people. Five years ago when I was doing [00:33:00] retirement village presentations for open days, it was an older generation. I think it's also an education piece where people don't understand the difference between a retirement village versus age care. Like I speak to people and they say, oh, I'm ready for a retirement village now. And, and I said, oh, so, so, you're still independent? And they're like, oh no, I need this amount of help. So people don't understand the difference. And I think it comes back to knowing what they have access to. But I did a open day at Belrose on the Northern Beaches and the, the sales guy said the best thing, and, and I totally agree with it, is a lot of people wait until it's probably too late. And he said, if you're starting to look at retirement villages early, and you'd be surprised, there are so many people out there that are, are looking at retirement villages. He says, move while you still can so you can enjoy the retirement village. You know, they've got tennis courts, they've got bowling greens, they've got,~ uh,~ darts nights, they have indoor bowls.
Mitch: They had,~ uh,~ when I was there, there was an origin night for, for rugby league. ~Um, ~they've got men's clubs, females [00:34:00] clubs, swimming pools. ~Um, ~and so they're like, move in while you can still access it while you're still nimble. ~Um, ~but when you were just asking that question, the first thing that came to mind was I did a,~ uh,~ an open day for another company down in Padstow. ~Um, ~and this lady was there. She had lived in Padstow her whole life. I think it was 50, 60 years. Um, her daughter was with her and mom had set herself. I just can't cope in the home anymore. My husband had passed, it was a big 800 square meter block. ~Um, ~she was like, I have to get someone in to mow it and do all this stuff. I just can't keep up with it. I love gardening, but I just can't bend down. I can't do these things anymore. I think people are now starting to get to a realization and they're having friends move into different villages and there's, and they're like, oh, my friend's over there. But this lady was,~ um, uh, ~loved going to the church. She was, had been going to the church for 30 plus years in Padstow and she wanted to make sure she was still somewhere close enough. So she still had her friends. She could still go to church every Sunday. So I, I think it's a mix of both where people are starting to realize [00:35:00] themselves,~ um,~ but the kids are also being a lot more,~ uh,~ proactive and starting to take the next step and,~ uh,~ prepare for, you know, what people should be doing.
Mitch: And there's so many different options now. Like obviously in Sydney, most of the people have houses that, that older generation, so selling and downsizing into an apartment,~ um,~ or a smaller property,~ um,~ they're still gonna have a little bit of money left over. And the retirement village, there are so many different villages with different prices and options available. ~Um, ~and there is a lot of vacancies in retirement village spaces. So I think that's, it could be a lot of, yeah, well look in some pockets there, there is full,~ um,~ some people wanna look for rental options. There's not a lot of rental options, but if you are doing the purchase option of,~ um, uh, ~buying into the village to an extent where you're, you're paying a, a, an ingoing contribution. ~Um, ~there is a lot of places, because there are so many, I do so many open days. 'cause they're just trying to sell.
Veronica: Right. So the new, the open days are for new facilities or they're for facilities that have the existing [00:36:00] facilities.
Mitch: yeah. Both. So, so like,
Mitch: uh, '
Veronica: cause that's not what we keep hearing. We keep hearing there's a shortage of spaces. But again, you, you mentioned that there's a terminology, there's confusion as to what term refers to what type of care or what type of, um, residents. And so it's the aged care where they're higher dependency. That's a shortage, that big wait list. So you are saying the independent living at the under other end of the spectrum, it's actually,~ um,~ there's opportunity to, to buy.
Mitch: yeah, they're, they're building heaps. Like even in the inner west, in, in New South Wales, they're building, uh, there's two high, there's two different villages that are being built high rises and multiple. ~Um, ~I was just doing a sales one just before Christmas down in, uh. down in the Sutherland area. ~Um, ~they had a, they've got a brand new one where they've been building for long, long time and they're on their last little building and they're doing their own little community.
Mitch: It sounds what they're doing down there is fantastic. That's an Anglicare one. ~Um, ~but,~ uh,~ yeah, a lot of places 'cause they're just trying to sell because I, I think there's a, not a bugaboo, but I, I think people just aren't educated on [00:37:00] what a retirement village is, or they think, oh no, once I go in there, I'm, I'm moving outta my home.
Mitch: But there are so many people that. I definitely believe they're stubborn. ~Um, ~where they just don't wanna move. And like, I use this example, my, we have a family friend,~ um,~ her father, he's now passed,~ um,~ but he lived up on the Central coast in New South Wales. And the daughter lived in Sydney and said, dad, come down, mom's passed. He was, you know, sitting in his own filth. He wasn't just coping by himself, she couldn't take him into the home 'cause her home was full. She had a, a, her kid and her grandkid there and she said,~ um,~ you know, you, you need care. You can't cope by yourself. And he goes, I will die before I go into residential aged care. He went into residential aged care, just on respite. They had to kind of trick him and say, look, it's respite first. If you don't like it, you can go home. They went to visit him after a couple of days and they said, oh, where's dad? And they said, oh, he is in, out in the lounge room doing something. And they went out there and he goes, Hey dad, I'm here to see you.
Mitch: And he goes, go away. I'm busy. He had made so [00:38:00] many new friends, he was loving life. And, but to be really honest, even the presentations I do for vis groups, I show them pictures of retirement villages now and residential aged care homes and the looks on people's faces go, oh. ' cause even 20 years ago, my grandmother went into her home and she was in a shared room.
Mitch: It was like an old hospital. Now they're better than hotels, honestly, what you get within the homes,~ um,~ and they're fantastic. Look, they're not for everyone and you don't want to go into residential aged care. But even the retirement villages,~ um,~ they are just unbelievable the amount of support you can get. ~Um, ~the community in there, it's fan, it's fantastic. But is it for everyone? No.
Veronica: yeah, and, and I love the, earlier on you use the distinction and the type of person that would, would benefit from going into a retirement village versus those that don't. ~Um, ~you know, my parents moved into one couple years, a few years back, and. Mom's not highly sociable, but my dad died six months after they moved [00:39:00] in.
Veronica: And, and even though she's not highly sociable, she's ~uh, ~enjoyed having all of those, you know, even just coffee on the terrace, she talks about going having coffee on the terrace and she's enjoys the, small touch that she does have. It's sort of surprised me really, and I think probably surprised her. But you know, it's interesting because after dad died and the, they've got, you know, people there, they check on the residents, it's independent living, but they noticed she wasn't cleaning the place. You know, she'd just sort of given up and so they stepped in and so that basically that she has to have it cleaned, but. And then they got her, they got her access to home care so that she's now got, someone goes here once a fortnight and cleans a place for her. But again, if she was living in her own home, she would not have known, like, I mean they used to get my brother to come up. He lives down the Southern Highlands and he used to come up to mow the lawns, you know, down to the southern shore. And, you know, I'm sure he'd really rather not be doing that huge Shrek just to, to mow their lawns. But, you know, potentially they could have got help while they were still in the house. And I think there's a lot of [00:40:00] that. People don't know what they, what potentially they could get access to. But you know, I think the retirement village does, or the retirement living does offer. More than a lot of people probably would realize. But I'm curious though, if we can sort of touch on the different structures of buying into these things now,~ uh,~ there, you know, I know even within the same villages you have options quite often. So if we can sort of just cover some broad, broad brushstrokes around that, because also I look at it too, and as a property person for forgetting what we're talking about, you know, in terms of inheritance in patients and elderly abuse, which we didn't use that term in this episode, but it's out there. ~Um, ~forgetting that for a moment, from a pure property perspective, I look at someone sells an asset that they might have held for 30, 40 years. ~Um, ~they then gone by like it might've been a good asset as well, which has had incredible capital growth and you know, they've got all that tax free. They go then and invest in an asset that's not technically a good asset because they're gonna give away a huge amount of equity, but also the right to capital growth and. You know, there, [00:41:00] there's, implications for that o obviously down the track, but you know, the lifestyle and the simplicity of having someone there to care for you and to keep an eye on you and support you, and you're saying all those facilities available for you in house, there's a lot to be said for that. So if you can sort of just take us through that sort of in a broad brushstroke and idea of what, what are you forgoing and what are the entry and exit costs here?
Mitch: Yeah, definitely. So in retirement villages or independent living or over 55. Every different company has different contracts,~ um,~ different structures. And this is why we always suggest to people, you know, ~um, ~when you go compare, if you go on to look at a village, compare the different room prices, compare the different villages, 'cause it's all gonna affect you differently.
Mitch: Whether it's tax, whether it's pension, whether it's,~ uh,~ capital growth, it's all gonna affect you in different ways. And so the simplest way to explain it in retirement villages is there's usually three costs. There's an ongoing cost, which you pay to,~ uh,~ you pay to [00:42:00] the retirement village. ~Uh, ~when you enter there is an ongoing,
Veronica: And what could that be? Would that be a hundred thousand dollars, $5,000? Half a million? You know?
Mitch: Some of your older villages, you can get in for 300,000. ~Um, uh, ~even in other states I've seen, yeah, two 50. So, yeah. Depends where you are. A lot of your older ones are gonna be 300, 400, 500. ~Um, ~some of
Veronica: high
Mitch: that's low on the low end.
Veronica: low,
Mitch: Yeah. And then some of your brand new builds that you are getting,~ um,~ you're looking at, I was at one the other day, that was six mil.
Veronica: Yeah, I looked at one, actually two and a half. So three. Um, yeah,~ Um, ~
Mitch: So this was in, um, on the North Shore,~ um,~ views of the harbor,~ uh,~ views of skyline of the city. Six
Veronica: fair enough. That's cheap.
Mitch: Yeah. I'll buy three. ~Um, ~so,
Veronica: But you know, if, if you've just sold a house, it might be worth 15 mil or 10 mil or something. You know, that's, I mean, at that, in that,~ um, uh,~ demographic potentially.
Mitch: Yeah, it depends where you are. Like, uh, I've got a gentleman at the moment, [00:43:00] he live, he's by himself, unfortunately, he's getting older. He doesn't have any family. ~Um, ~his care needs are getting higher and he says, look, I don't wanna bring someone into my home to care for me. I'd rather go into a nice home. ~Um, ~he's in the city, I think his property's, you know, four, five, $6 million. I think it's closer to six. ~Um, ~and he is just like, I want an aged care home. 'cause I need the care, his disease that he's got is gonna get worse and worse. So he is like, I'll stay in my home for the time being, but I want the nicest home.
Mitch: I want, I want views. And I was like, sure, we'll look at that. We can do that. ~Um, ~but yeah, with the retirement village, and, and this is the, the, the thing, they've made a lot of changes. The retirement village, there was always a, when you used to, ~uh. ~Buy into the village to an extent. Um, for the entry contribution, you'd pay for the entry contribution. The industry average,~ um,~ for many, many years used to be that whatever you buy in for, there would be a 30% deferred management fee. So whatever you bought in at your exit price, you'd lose 30%. And I think the best thing that retirement villages [00:44:00] have done, uh, have, have introduced over the last five years,~ um,~ is offering different options. ~Um, ~so now you can have a 10% deferred management fee, so you can pay more upfront, so you get more back when you leave. So you can try and keep your pension or uh, reduce tax. There's different things you can do. Everyone's situation's gonna be different. And the example we use when we do open days and explain this to people, we say it's. When looking at a retirement village, if you've got a retirement village that can offer you different contract options with the different, uh, deferred management fees,~ um,~ it's kind of like going shopping for a pair of shoes and you go looking for a pair of shoes, and if they only offer one size or one color, if it's not your color, you're not gonna buy it. So these companies that are now offering multiple options,~ um,~ you know, exit options,~ um,~ it's really gonna benefit more people. Previously it was a, you know, one size fits all. Now you can find the best option for yourself. There is even been some companies that allow you to [00:45:00] say, well, look, how about you give us, uh, we'll give you back 5%, but you pay a bigger fee upfront. And so we're really starting to see that. So in regards to the cost, you've got your entry contribution, the exit fees, your deferred management fee, and then your, uh, and then you have an ongoing. Or a recurrent charge. And average of a recurrent charge at the moment is about a thousand bucks a month. And so that covers your water council rates, building insurance, staffing of the whole facility, the amenities, so your pool, your guard, uh, your tennis courts and everything.
Mitch: It has village operations, so your maintenance, your gardening, the upkeep of the general area. And so that's where I was mentioning before with the home care aspect of things. A lot of those stuff is within your, that last category of home care. ~Um, ~and so there your three big costs, your ingoing, your ongoing, and then your outgoing is that deferred management fee.
Veronica: if I can just run a couple of scenarios past you. Say for argument's sake, you, you, you know, it's, [00:46:00] it's a million dollar apartment and you've got the option of going in, paying a million dollars and say with a, say, a 10% deferred management fee or, uh, is that a, and then maybe 800,000 with a, I don't know, 30% deferred management, 500,000 with a 50%.
Veronica: Is that the way it sort of works? That type of,
Mitch: So most of the time they'll, they'll, they'll only show you the 30% option. ~Um, ~now look, it can change. Look, there are some companies that charge 35. You just gotta find what their model is. ~ um,~ so most companies will just advertise their price based on the 30% model. And then once you sit down and look at, you know, the two bedroom, the one bedroom, whatever it is, they say, well, actually, if you want the 10% option, you'll now pay 1.25 instead of 1 million.
Veronica: and so what scenarios would it be better to go and, you know, get the 10% deferred option versus the 30 or, or a higher deferred? You know, like what type of scenarios are we talking
Veronica: I mean, assuming you can afford to choose. 'cause I guess some people would go in there and go, well, I can't [00:47:00] afford, you know, the 30 even, like, I'm gonna go much higher.
Veronica: Like, you know what I mean? So what, what, what sort of things will, should people be considering?
Mitch: yeah, definitely. So the, to be really honest, what happens is, especially in Sydney, like, let's look at the Hills area as an example. So in the, the western part, northwest of Sydney,~ um,~ some of the retirement villages start at 500,000 as a 30% model. ~Um, ~500, 600. There are some new builds, but let's look at the older ones. We have a lot of people that are selling their homes in the hills for 1.5. ~Um, ~you know, sometimes $2 million. ~Um, ~so a lot of people go into the village and they think, oh, I'm gonna take the cheapest one. They think I'm gonna take a one bedroom 'cause that's all I need and it's gonna cost me 500,000. And then we had a chat to them and say, well, how about we look at spending more?
Mitch: And they said, why? And I said, well, let's look at the examples. So if you've sold for $1.5 million and you're a single person, previously you were getting the full pension, if you now buy a $500,000 unit, you've now lost your pension. So maybe it actually might be worthwhile to [00:48:00] spend a little bit more to try and get your pension back. And they go, oh, actually I didn't even have a think, I didn't think about that. So instead of looking at the 30% option, let's look at the 10 or let, don't we look at a two bedroom or a three bedroom. So now you can have one night with the girls when they come over, they don't have to drive. You can have the grandkids over, whatever it may be. ~Um, ~that's one aspect. The other aspect is,~ uh,~ because home care is means tested, moving forward. Residential aged care is means tested. the more you have in the bank because your house is not counted towards that means test, it's everything outside of that. So potentially if you are a couple, depending on how much you have in the way of assets outside of the house,~ um,~ it might reduce the fees for, you know, hubby when he needs to move into age care. And so these are the conversations we're really having. And I think the, the biggest conversation we have with a lot of people is hubby needs to move into care. And now wife is going, uh, wife says, I can't stay at home by myself and I wanna be quite close to him, but I'm not ready for age care, so let's find a retirement [00:49:00] village.
Mitch: So we're getting that a bit as well too at the moment.
Veronica: Here. Here's the thing too that I, I hear from a lot of people is that they wanna buy into a retirement village that also has an aged care facility, but. If there's a shortage of spaces in the aged care facility, what are the guarantees that if one of them needs higher care, they're gonna be able to go into that particular facility?
Veronica: Do they get preferential treatment?
Mitch: Yeah, good question. ~Um, ~yeah, look in, in some area, like there's, there's a home on the northern beaches,~ um,~ has a retirement village and aged care. ~Um, ~and everyone just wants to be in the retirement village for whatever reason. And the aged care is always full. The main reason it is always full is because they,~ uh, uh,~ prefer,~ um,~ the retirement village residents first.
Mitch: So especially if, if it's within the same company, so like a uniting and Anglicare a, you know, whoever it may be. ~Um, ~if you are in the retirement village, you'll take preference over the general public. ~Um, ~and so
Veronica: Because that'd be pretty bad, wouldn't it? You know, you, you're both buying into a retirement village thinking that that's just what's gonna happen. That's where you're gonna go if you need, and then it's all, oh, no, [00:50:00] you can't. You gotta go randomly and you, that'd be pretty traumatic I would imagine.
Mitch: Yeah, I, and that's the thing, because if you are in a retire, and I know a lot of,~ uh,~ home care and retirement village companies are getting a lot better where they're talking to each other now. 'cause like a lot of your companies like Uniting and Ang Cares, they've got the Holy Trinity, they've got your home care, they've got the retirement village, they've got the age care. So while the people are in the retirement village, they can start having the question like they can see if people are starting to decline to start, prepare for that next stage. The only time that it might not work out perfectly is if, you know, unfortunately in aged care you're waiting for death. that's the game.
Mitch: And so if no one's dying, then you know, you, you're waiting. And so potentially if sometimes people have to find a home elsewhere for the time being until a bed becomes available in their preferred home, that does happen.
Veronica: They were in hospital for that time.
Mitch: Yes.
CB: It doesn't seem like the right episode. Ask for a property, Dumbo. ~Um, ~just being real. That's, but if you've got a, you know, maybe a lighter hearted one that's not,~ uh,~ too offensive. ~Um.~
Veronica: Or it could be an [00:51:00] example of a mistake somebody's made that they could avoid and, and would,
Veronica: you know?
Mitch: Or do you know what I, I thought about this. 'cause I, I, I've listened before and I, I, thought of different ones and I thought I'd make it specific to, I guess, the elderly who we're talking about, right. Is because,~ um,~ I was trying to write down some different ones. 'cause I was like, it's not, they're not, it's not a dumb move by them.
Mitch: I guess it's just because they're just uneducated. They're, they're not sure. And so if people are downsizing, it's making sure that if you are moving to a smaller home check for the silly little things around the home that you know that there's no step ins to the, the showers and baths. And, you know, accessibility wise,~ um,~ we see so many people where they. As I mentioned before, they wanna move into,~ uh,~ they wanna stay out of age care, but they move into a home where, you know, there's stairs or, you know, it's preparing for the future, you know, what, what lies ahead. ~Um, ~but I think that's the biggest thing is just making sure you stay away from stairs and steps into,~ uh,~ showers and baths. But,~ um,~ if you are looking at retirement village, it's not a dumbo [00:52:00] thing, but compare your options. Speak to someone, compare all your options because there are so many different contract options out there. There are so many different,~ um, uh, ~options within the retirement village space. ~Um, ~compare the options 'cause it's gonna affect you, you financially, it's gonna affect,~ um,~ you know, for the tax or pensions or income.
Mitch: It's gonna affect one way or another. So at least if you compare all your options, you can find, you make,~ uh,~ the best financial decision,~ um,~ when moving into a retirement village. If you choose that.
Veronica: I think I, I'd sort of add to that too, because a lot of people that we speak to, 'cause we do quite a lot of vendor advocacy, particularly for people who are moving into retirement living. ~Um, ~and so what that is, is that we help them coordinate the sale of their home,~ um,~ and facilitate that and be there, be their guide through that whole process because it's a very traumatic time and often they have not sold a property for decades. ~Um, ~sometimes their grown up kids live in different city as well, and they're like, we can't help, you know, because we are just not there. So, so that's where we step in and really able to step through and just, and look after their best interests. [00:53:00] But what happens is that then, then under this really stressful.
Veronica: Home frame. To get things done. And yes, the retirement villagers usually give them a fair amount of time, but that never feels long enough for somebody who's been in the, in the home for decades. And so, you know, I think too, it's, it's also be thinking when, when you're out there comparing, when you get offered a place, it's quick and you have to make a decision quickly because these, even though some of these, these, uh, retirement villages talking about, they're building new ones.
Veronica: And so they have, they have lots of rooms available, lots of apartments available. Quite often people in established areas will be looking at a particular retirement village and it won't have. Plenty available. They do have to go on a waiting list for the one that they want to come available. And when it does come available, there's a lot of pressure to take it and to, to jump.
Veronica: And so that then puts more pressure on the sale of their property as well. And it's, it does really turns a dial up on, on what is a very stressful time. So I [00:54:00] guess, you know, even with our business, we love it when people engage us when they're in that process or they talk, engage with us. I don't have to engage us at that point, but they engage with us at the time that they're starting to look at retirement villages.
Veronica: 'cause you really have to plan the whole thing out and you have to get yourself primed, ready to go, you know? So then they go, bang, you press the button and it feels a lot less stressful. So I would, I would add that in as well. I think while you're comparing, think about how you gonna fund it, how you gonna get there and, and perhaps get some financial advice too, just to work through those, those scenarios and those options. So I.
Mitch: No, I, I agree. It's, it's funny. I'll just give you a quick, when, when I was studying,~ um,~ we did a case study ~ uh,~ in Florida, obviously big retirement area, and they were struggling with sales at the time. A lot of the retirement villages or whatever they call the names over there, similar retirement village, they just couldn't get people to purchase.
Mitch: And they tried different things and they just couldn't get people just to say yes. And then one of the companies said, we will give you a year's. ~Uh, ~worth of a cage so you [00:55:00] can move all your stuff into the cage and you've got a year to slowly go through it. Their sales went through the roof because people didn't want to go through and, and, you know, declutter and do all of that. They wanted their time to go through it. So by paying, they said We'll pay for a year's of the year's worth of the cage fees for you and just went, went up. But thank In Retirement Village, they do have the cooling off. It's only for a short period and you really need to make sure you've got all your ducks in a row, as you said,~ um,~ ready to go.
Mitch: You know what you're gonna pay for because the point, the, the point of retirement villages for a long time, you want 10 plus years out of it. You know, residential aged care is only two and a half years. Most of the time. Resident,~ uh,~ retirement village. You want for a long time. You want to enjoy it and stay there for as long as possible and stay out of aged care.
Mitch: That's the goal.
Veronica: Brilliant. Mitch, that's been such a fascinating chat. We really appreciate your time and your expertise today. Um, we haven't had enough conversations around this. There's two in a row. ~Uh, ~we're obviously gonna have to have more. It's becoming more of an issue, so I think it's, [00:56:00] it's really valuable and,~ um,~ yeah, intel and advice, uh, no advice.
Veronica: You weren't giving advice, insights that you're giving
Veronica: today. Thank you very
Mitch: As much information. No, thank you for having me. Hopefully, uh, so someone was able to learn something, take something away from this. ~Um, ~but yeah, if you ever, if you ever want me to come back more than happy to.
Veronica Morgan: If you have a question that you'd like us to answer in an upcoming q and a episode, you can send us a voicemail or written question via the website. The elephant in the room.com au. Or you can email us directly at questions at the elephant in the room.com
Veronica Morgan: au.
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