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  • Writer's pictureBill Savellis

The Difference between a Retirement Village and Aged Care

Deciding what the later years of retirement will look like can be difficult to determine. You want to ensure that this stage of life is enjoyable and meaningful — a lifestyle you deserve. Some of the benefits of moving out of your family home may include:

  • Increased social activity

  • Safety and security

  • Meeting personal needs on a daily basis

  • Being surrounded by peers

  • Being in an environment that promotes physical activity

  • Additional services available if needed


Retirement villages and aged care homes are two options you can choose from, with each having unique qualities and benefits that will be suitable for different people and depending on the situation.



There are many misconceptions about the difference between these two types of facilities; each one provides unique benefits that will appeal to specific needs. Let’s explore the main features and benefits of retirement villages vs aged care facilities.


Retirement Villages


Retirement villages are a great option for those looking to enjoy their retirement years in comfort and security. They offer an independent living arrangement in a supportive, community atmosphere that allows you to socialise and take advantage of amenities like swimming pools, fitness centres, and communal areas.


Residents can also receive assistance with daily tasks such as shopping or housekeeping, while still enjoying the social lifestyle they desire. With a range of options including homes, apartments and villas, retirement villages can help provide a safe and comfortable place to live during your golden years.


There are a variety of models for retirement villages, with a range of services and fees.


The following are just some options:

  • Lifestyle resort – Occupants purchase a freehold title and build their homes while leasing the land.

  • Freehold complexes – The occupant purchases the freehold title but there may be other fees in comparison to other facilities registered as a retirement village.

  • Right to occupy – The occupant pays for the right to live in the property while having the option to pay for other services.

Some retirement village developments now have integrated levels of care and are offering residential care accommodation. This means that even though your needs may change, you can still live in the same community.  


Aged Care Homes


Aged Care facilities are traditionally smaller in size compared to retirement villages and provide another option that are designed to provide supported living and care. Ideal for someone who is unable to live independently, these facilities accommodate people with a broad range of needs, with round-the-clock emergency care provided. This is particularly important for those residents requiring daily support such as personal maintenance and feeding assistance.


Often means tested, the cost for Aged Care facilities is split between the resident and the government through a set of subsidies, with fees covering all the expenses of care including meals and accommodations.


Additional services and amenities may also be covered, like newspaper delivery. Meals are usually scheduled throughout the day which gives residents who have difficulty with daily self-management a way to meet their daily needs in a supportive environment. For those interested in aged care living, an assessment process is necessary to help decide on the level of assistance and to make sure the care needs are met.

What's the Main Difference between a Retirement Village and Aged Care?


One of the main differences when moving into a retirement village or aged care facility is whether your pension is affected.


Eligibility for an age pension is means-tested so if you own your home, it is an exempt asset, but in a retirement village, your name is usually not on the title deed. Instead, the rules for determining whether you are a homeowner or not depend on how much you pay as an entry contribution.


If you pay more than a threshold amount as your entry contribution, you will be classified as a homeowner and the amount paid is an exempt asset. If you pay less than this amount, you are a non-homeowner and the amount paid is assessable but against a higher threshold level.


One trap to look out for is the difference between a retirement village and a land-lease community where you do own the building and lease the land it sits on. For Centrelink, this is an important distinction as you are always classified as a homeowner in a land lease community regardless of the entry cost.


In comparison, those moving into an aged care facility receive the same amount of pension unless they have a significant change in circumstances. If you choose to, you can ask for your pension to be paid directly to your residential aged care provider. The provider can then take out fees and transfer the rest of your pension to yourself or your nominee.


How do you get started?


When considering the benefits and downsides of retirement villages vs aged care, it’s important to do your research. Retirement villages can offer a more social lifestyle with communal amenities and activities, as well as some services like meals, housekeeping and transport. However, these services may come at an additional cost. Aged care facilities provide comprehensive care for those who require more support and assistance but may come at a higher cost.


Ultimately, it is important to consider all aspects when making decisions about retirement living, as well as consult with family members or professionals to ensure that the right decision is made. With careful consideration of both retirement villages and aged care facilities, a suitable living situation can be found to suit each individual's unique needs.


We are Accredited Aged Care Professionals and believe in helping clients throughout retirement and being prepared for the changes needed at life’s transition points so that these changes can be implemented smoothly and effectively.


Contact us today to make an appointment to discuss your current or future aged care needs.


Disclaimer: Prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, Olive Grove Financial Advice recommends that you consider whether it is appropriate for your circumstances. Information in this article was correct and current as of 29 March 2023.

Olive Grove Financial Advice is operated by Bill Savellis through The Financial Advisor (Australia) Pty Ltd ABN 72 619 546 431, who is a Corporate Authorised Representative (No. 1278394) of Havana Financial Services Pty Ltd.




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