Planning puts gold in later years
Choosing the right type of accommodation is one of the most important factors linked to retirement. Lea Jacobs reports
IT HAS been estimated that over 90% of South African retirees do not enjoy a financially carefree retirement. In addition 31% of pensioners believe that they haven’t saved enough for their capital to last for the rest of their lives, while 33% currently have a monthly shortfall between their income and expenses. These are pretty scary statistics.
However, there are ways to ensure that your golden years are well taken care of and these include planning ahead from a young age to help you meet your retirement goals.
Ideally planning for retirement should comprise, wherever possible, a balanced portfolio of investments that include property, cash, equities and annuities. It is also advisable to consider what sort of retirement accommodation is going to suit both your lifestyle and your pocket.
It is particularly important that when it finally comes to choosing a retirement village, that you select something that will provide you with peace of mind. Anyone considering this type of investment should look at a range of options that will best suit the type of lifestyle they have in mind. It is also pays to look at purchase options and determine whether to opt for life rights, sectional title or share block models.
When buying a sectional title unit within a retirement village, the purchaser obtains ownership of a unit or residence by means of a title deed that is registered with the Deeds Registry.
Share block schemes operate differently. Owners do not obtain exclusive title to the unit they have “purchased”. Instead they obtain shares in the company that owns the residence, the buyer being issued with a share certificate.
Life rights offer precisely what the name implies; purchasers have a legal right to occupy the unit for the duration of their life. The development and all its facilities remain both an asset and the responsibility of the developer.
In all three schemes the buyer has the protection of the Housing Schemes for Retired Persons Act of 1988.
While most South Africans are au fait with sectional title and share block schemes, life rights is a relative newcomer to the South African retirement landscape. Although life rights developments were first launched in South Africa during the 1970s, the concept only really started to take off during the 1990s. One of the advantages of life rights is that unlike property bought under the sectional title banner, the property is not transferred, there are no bond registration fees or transfer duties and there is no VAT payable.
Although residents enjoy similar privileges to homes purchased under a sectional or other title, the developer remains the sole owner of each unit and therefore carries the responsibility of maintenance and the upkeep of the village and its facilities.
When the life right terminates through death or other circumstances, it reverts to the owner of the village, who is then entitled to resell. Upon successful resale, the deceased estate receives the original purchase price along with a percentage of the net profit, which is determined and agreed at the time of purchase, less the selling and refurbishment costs.
Essentially, a life right scheme can be viewed as a housing product, an insurance policy and a worry-free existence rolled into one. This is not to say that peace of mind cannot be secured via other schemes but a well-run life right scheme offers all the ingredients for a successful, secure, and stressfree environment.
Arthur Case, general manager of Evergreen Lifestyles, says that the company is SA’s first national retirement brand and a proponent of the life rights model. “Ever- green villages are worth investigating for their high standard, wealth of amenities and for the ultimate peace of mind they offer. The various villages comprise homes and apartments, with lifestyle centres, providing accommodation as well as facilities and amenities for retirement.”
He says that because the life right developer is in the retirement business and continues to own the physical asset, he does not abandon the village as soon as the last unit is sold.
Furthermore, levies are fully disclosed in terms of the Housing Development Scheme for Retired Persons Act and the levy for the first two years is published in the sales agreement. Thereafter levies may increase in terms of a formula linked to inflation.
Evergreen says that it recognises healthcare needs change as people grow older and pride themselves on their personalised approach to the varied and changing needs of older people. The brand also advocates a home-based care strategy borne of the philosophy that treatment and support in fa- miliar surroundings is far superior and beneficial to its alternative: a frail care unit or hospital.
“With modern technology and the availability of focussed clinical services, the vast majority of healthcare routines can be delivered in the home,” says Case. “While transfer to a frail care unit remains an option, it is considered a last resort and undertaken only once a resident requires continuous medical supervision or has become disorientated. In this way, Evergreen meets the goal of sustaining residents’ independence via an environment that anticipates and caters for aging.”
The secret to a happy and secure retirement is to evaluate your needs and plans as soon as possible and to seek sound financial advice. We all want to retire happily with personal and financial peace of mind and retirement can certainly be an exciting and fulfilling experience once you have eliminated any of the potential stress factors involved. Getting the quality of life you want in the future will depend on how well you plan for your retirement now.
Evergreen at Lake Michelle, Noordhoek.