Support at Home Shake-Up: Why Retirement Village Payment Options Matter More Than Ever
The Support at Home changes aren’t just reshaping the care you can receive at home — they’re also reshaping how Downsizers should think about retirement village contracts. In fact, the new means-testing arrangements mean that your choice of village contract could have a direct impact on how much you pay for support at home. Downsizing your home may unintentionally “supersize” your care contributions.
Under the new Support at Home arrangements, the means test is directly tied to the Age Pension assets and income tests. On the surface that sounds simple, even logical. But simplicity can have sharp edges. If your assets increase — for example, because you’ve freed up equity from your family home when you downsize into a village — your Support at Home contribution increases. And those contributions don’t just rise independently: as your care costs increase, your pension decreases. It’s a two-sided lever designed to target subsidies, but it means you can find that it’s costing a lot more than expected.
That’s where retirement village payment options take on new significance. Over the last 5 years the industry has expanded the range of payment options. But with Support at Home reform, these choices are no longer just about funding an active lifestyle — they can also influence whether you can afford to stay in the village if you need to get home care.
The most common village model is the Deferred Management Fee (DMF), also called an exit fee. You pay a purchase price upfront and agree to pay a percentage when you leave — commonly around 30% *Source from RLC/PWC Retirement Census. This structure has long been popular because it lowers the upfront cost, enabling downsizers to free up capital to invest or spend.
But the market has evolved. Some operators offer variations that let you pay a lower purchase price in exchange for a higher exit fee which can be as high as 100% — for some people, especially those who can’t afford the usual DMF price, this model works well.
At the other end of the spectrum are the “no exit fee” contracts. Here, you pay more — sometimes significantly more — upfront, and nothing when you leave. Historically, these models appealed to people who valued certainty about funding a move into residential aged care or what was left to their estate. Under the new Support at Home rules, they may take on a different appeal: they can reduce your assessable assets and income and in turn reduce your contribution towards home care.
Payment options that once felt like a personal preference about whether you want to pay a management fee now, later or not at all have far greater financial implications. Downsizing isn’t just about the active lifestyle anymore; it’s about how you fund the support you may one day need.
Retirement Village Payment Options
Sally is 78, she is looking at downsizing into a retirement village. The 2 bedroom apartment she is interested in has 3 payment options: an exit fee of 30%, an upfront management fee of 20% or no exit fee for a much higher price.
The different contract options mean she pays a different amount when she moves into the village and receives a different amount going out. It also affects her Age Pension and Support at Home costs.
*Taken from a Village Guru report of an example village. Figures are for illustrative purposes only.
As you can see, the right village contract can support your lifestyle today. The wrong one can inflate your care costs tomorrow.
In this new world, choosing the right village contract is just as important as choosing the right village and that’s where a Village Guru report can help. It shows you the Village costs: ingoing, ongoing and outgoing and provides you with an estimate of your age pension and rent assistance payments and your Support at Home contributions. Your Village Guru Report enables you to see up to 3 different options side by side.
So whether you want to compare villages, see how one apartment compares with another or understand different payment options a Village Guru report makes it simple.
TrueCost is a new feature on Downsizing.com.au that gives you a clear, personalised breakdown of the costs of moving into a retirement village—before you sign anything. Powered by VillageGuru, a TrueCost Report shows your entry fees, ongoing charges, exit fees, potential equity, pension impact, and buyback timeframes in plain English. Simply look for the TrueCost badge on listings and tick the box to request your free report. It’s the easiest way to make one of life’s biggest financial decisions with confidence.
