Retiring, more often than not consists in people’s minds of three steps – 1) Having enough money to buy a retirement home, 2) Having sufficient left to enable them to deal with their bucket list, and 3) Living happily and peacefully ever after. That is, of course, a very nice summarized way to look at things, BUT ….
What eventualities can arise that can threaten this dream ?
The first of these ogres is not making the right choice when acquiring your retirement accommodation. Most of the reasons people make mistakes is because they do not ask the right questions. Reversing out of a contract is virtually always a very, very expensive option compared to ensuring you ask the right questions before contracting, thereby eliminating potential mistakes before they are made.
Reams of glowing details are written, and professional photographs adorn brochures made available to potential purchasers by developers of Retirement Villages. Carefully selected benefits are placed in categories of interest, arrangements for payments are made easy and you are invited to become the newest investor to slide into your future home. After all, you deserve to treat yourself with the best – you have worked your whole life for this.
When you assess what you are looking for, this is the kind of approach that is usually facilitated by many developers’ marketing divisions. Nothing wrong with this on the face of it, but ask yourself the following questions and then ask yourself if the negotiations still fall into the category of being “Uberimae fidei” (in the utmost good faith) from your point of view as an investor? You owe this ultimate honesty to yourself first by making sure of facts.
Does your purchase leave you with enough reserves to address medical emergencies that could possibly occur? Have you done some homework in this regard and do you know with reasonable certainty, or are you guessing?
Are you going to be able to deal with normal increases in levies as part of an inflationcoupled budget we all have to live with? Have you looked at figures and obtained a history or estimates of increases all in writing?
Is the proximity of retail shopping centers reasonable if you or your spouse were to become semi-impaired later on? Is there transport if you can no longer drive?
Are there solid arrangements in place that assist in dealing with potential medical issues? What agreements or facilities are there and with which Medical support group or agency? Is this agency or group registered with your Medical aid so that you can claim if necessary?
Is there clarity about ownership and what will happen if you lose your spouse? Will you be able to continue living on your own and is there an assisted living service available?
If you are purchasing, are you familiar with the different types of ownership like Life-right, Sectional Title and Individual Title but do you know which you are to settle for and why? The freely downloadable booklet “Are you Grinding to a Halt or Gliding into the Future” is available at www.saarp.net which gives basic guidelines in this regard.
What is the resale potential should you wish to, or want to sell? Circumstances do change over time and you might find yourself wanting to sell even if you cannot imagine it now. We have had many people in this situation contact us, people who never thought this would ever happen or be necessary.
If you acquired your property on Life-right, does only the developer have the right to resell and set the price or can you also be involved? If the former, is there a guarantee that you will be paid out within a certain period of time? If not, think carefully – consult an attorney. It is possible, for example that the execution of an estate can be held up by this kind of situation.
Are you aware that your purchase agreement is de facto your title deed when purchasing Life-rights? All you may and may not do is contained in this document and it is therefore vitally important that you make sure all your questions are answered in the offer to purchase, because once accepted, it is a fact of life. “Caveat emptor” means let the buyer beware.
Can the development provide the connection to high-speed internet and make this available to you? The reality is that we are now becoming involved in IOT (The Internet of Things) and unless you are well connected, you might find yourself at a major disadvantage in future.
Have you compared the pros and cons of the different types of ownership ?
Is the developer able and willing to give acceptable guarantees that the development will be completed as per the plans shown to buyers? Many stories have been told to us about promises that were made to “seal the deal” and were not carried out. Do not allow yourself to patronize the restaurant in your planning before it is built !
Have you considered the very real possibility that this might, after all, not be your last move if you are blessed with a long life? Do you realise that retirement is not a slow gentle downhill slide to a stop, but might require multi-phased changes as you age? So many changes can take place, and these can be anything from medical grounds, to emigration of whole families and even financial disasters occurring as a result of incorrect investments. Think of people who may have invested their all with Steinhoff as an example.
Is the development pet-friendly and what are the rules governing pets? Animals are a major factor in the lives of many people, and purchasing on an irrevocable contract without checking on the facts in the Village you are purchasing in, could be an emotional disaster. Not only the kind of animals but also the number allowed should be checked. Also remember to check if animals can be replaced if your current pets die.
Lastly, when you have moved in and settled, does your investment leave you with enough to implement your retirement dreams out of your cash-flow, or will you have to denude other reserves in order to realise these dreams?
Ogre number two is not sticking to your Retirement Plan.
In a publication by the AARP (The American Association of Retired People) written by Stacy Rapacon, Updated September 17, 2020, the statement below is as valid in the RSA as in the USA: “In your working years, you may feel torn between two common financial goals: Your retirement and your child's education. You can certainly try to work both into your financial plan, if realistic, but most experts recommend prioritizing your retirement, as selfish as that might seem. One common argument for this strategy is that there are no financial aid packages for your retirement like there are for covering school costs. Another is that without ensuring your financial independence in retirement, you risk becoming a burden on your children later in life.
Even for other financial assistance you may offer your adult children — whether it's paying for a wedding or keeping a roof over their heads — remember to keep your own needs in mind. “People don't regret helping their adult children, but they regret not setting boundaries when helping them.”
Your children will face the same stark realities as you do one day and “helping them now” merely means you have less, cannot address the matters you have planned for and would like to, whilst they have it easier than they should have it, and easily exceed their financial boundaries because they have a back-up.
There are many other ways people can overstep their own boundaries, and you must bear in mind that there is no more time available to make up for errors and put extra aside.
Ogre number three is a simple word – Assumption.
The fact is that it is so easy to assume and therefore sidestep matters that make for a wellbalanced and functional Retirement plan which is reviewed regularly.
Examples are legion: Making sure your WILL is up to date goes without saying, and bear in mind that your spouse may have to live for many years with the effects of your “WILLful” (even if no ill intent is involved) misdirection. For example, if you leave a part of your estate to your children, and your Retirement Plan assumes you will be the surviving partner, your spouse may be beholden to the children and live an utterly miserable financial life.
Assuming excellent health for both as long as you may live will not necessarily be untrue, but you do not know and therefore deciding to increase your disposable income and not plan for the possibility could very well mean that you could find yourself physically or mentally disabled and forced to live in circumstances of poverty.
Bear in mind that at the end of your lives, all the money and other assets left over can be bequeathed to your kids or any other heirs if you wish it
What do you require in old age long term ?
Maintenance of dignity in old age – A summary of our primary goal often overlooked in retirement planning can usually be linked in varying degrees to:
1. Spiritual peace – people after all are spiritual beings, without talking on any religious specifics
2. Sound family relationships
3. Physical good health for one’s age with medical provisions
4. Financial independence or stability
5. Security of residential tenure
6. Having been able to make your own pre-emptive decisions about the latter phases of life
7. Having sorted out all potential issues in regard to WILLS thus avoiding family stresses.
8. Having fixed routines (especially socially) contribute to stability and purpose.
Conclusion: Plan professionally and correctly; Purchase correctly. Re-plan regularly (with a qualified professional); Stick to your plan; Discuss any possible changes with your planner before implementation, and you have done the best possible for yourself and your spouse.