Pandemic cripples current retirement plans
Coronavirus whittles down choices and as supply shrinks, senior living prices will rise
Covid-19 has already wrecked many people’s retirement plans as financial turmoil forces downgrades to carefully constructed budgets.
Those on the first steps of the retirement journey have been hit by a triple whammy, said Mike Schulze, executive director of East London’s Berea Gardens Retirement Foundation.
“Interest rates on investments have fallen, so future income must be recalculated. House prices are down, so selling a home to effectively swop it for one in a retirement complex is not possible at the moment. And the final one is the increased cost of living, which has already started to follow the pandemic.”
Schulze said accommodation prices were, for the average person, the most critical factor when embarking on retirement. Covid-19’s impact was whittling down the choices and as supply shrinks in the face of demand, senior living prices will rise.
Laurette Schaffer, general manager at Leisure Homes, which manages Kennersley Park, said Leisure had plans for an early dementia ward, but they are now on hold. Schulze is in a similar predicament with extensions to an assisted-living complex. Both organisations have cross-subsidy models, with life rights accommodation assisting with care facilities.
Schulze, who is a chartered accountant, said: “If the financial woes persist the pool of buyers that can afford to buy into life rights accommodation will shrink. If sales fall we will have to watch cash flow very carefully.”
Barry Kaganson is the founder and chief executive of Auria Senior Living, which owns and manages a portfolio of senior living communities. He said the World Health Organisation predicted that globally the over-60 population is expected to double by 2050, putting enormous pressure on the retirement industry.
Cobus Bedeker, MD of Evergreen Property Investments, said that prior to lockdown several construction firms had ground to a halt.
The twin impact of the pandemic and the faltering building industry is devastating for future retirees in BCM. Evergreen has shelved plans for 5,000 retirement homes in six projects, until Covid-19’s full impact is measurable. Up to 6,000 jobs are on hold.
Internationally Covid-19 has struck hard in retirement centres. In the UK a quarter of the country’s known virus-related deaths were in care homes.
In Spain 4,260 residents diagnosed lived in senior homes, and in France a third of all deaths (3,237) were in care facilities. The National Centre for Immunisation and Respiratory Diseases in the US has estimated that eight out of 10 Covid-related deaths were people over 65.
Schulze has been in contact with Highlands House, an old age home in Cape Town, which was recently hit by the virus, with 32 staff members and 12 residents testing positive. After confirming coronavirus, Highlands tested all but a few residents and staff, over 500 people.
The exercise cost nearly R500,000, an unaffordable amount for the average retirement home. Schulze said given that the virus targets the aged, Highlands’ outcome, based on meticulous planning, gives him hope for the future.
There have been no reported deaths at Kennersley or Berea Gardens.