Felix · Richify's AI CFO
Entry price, DMF and your super side by side — Richify shows what each option leaves behind.
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The ingoing price is the part everyone reads. The exit fee is the part that decides what a retirement village really costs — here is how the whole structure works.
People often blur three very different choices. Downsizing means selling your home and buying a smaller one that you own outright — you keep all the equity and any future capital growth. Residential aged care is for people who need daily clinical or personal care, and is funded and regulated under a separate Commonwealth system with its own fees: a basic daily fee, means-tested contributions and a room price paid as a refundable deposit or a daily payment, which our aged care fees calculator works out from your income, assets and home. A retirement village sits in between: independent-living housing bundled with community facilities and services, governed by state Retirement Villages legislation and — crucially — by the contract you sign. You usually do not own the unit the way you own a house; you hold a long-term lease, licence, or (less commonly) strata title, which is why the money works differently.
The ingoing contribution is the amount you pay to secure your unit. It is often priced in the same ballpark as buying a comparable apartment or villa in the same suburb, which is why moving into a village can look, on day one, a lot like buying a home. But two things differ from a normal purchase: you may be buying a right to occupy rather than the freehold, and the ingoing amount is the base on which some contracts calculate the exit fee later. Because of that, the ingoing figure alone tells you very little — you have to read it together with the exit terms in section 3.
The deferred management fee (DMF), also called an exit or departure fee, is the operator's main charge — and you pay it when you leave, not when you arrive. It typically accrues as a set percentage for each year (or part-year) you live in the village, building up to a capped maximum after a number of years. The three variables that decide how large it gets are all in the contract:
Why the base matters
A fee charged on the resale price grows if your unit appreciates; a fee charged on your ingoing price does not. Same headline percentage, materially different dollars. This is exactly the clause to check line by line — the calculation is set by your contract, so use it, not a rule of thumb.
Separate from the ingoing and exit amounts, you pay ongoing recurrent charges — the village's equivalent of body-corporate or service fees. These fund the shared facilities, gardens, maintenance, management, and often some services. They are usually payable monthly or fortnightly and can rise over time; some contracts let you keep paying a share of these charges for a period even after you move out, until the unit is re-sold. Ask how recurrent charges are set, how they can increase, and what happens to them during the period between when you leave and when your unit is re-licensed.
When you leave, your refund is generally your ingoing contribution minus the accrued deferred management fee and any agreed deductions — commonly reinstatement or refurbishment costs and a share of the re-sale and marketing costs. Two clauses decide the rest:
Retirement villages are regulated state by state — New South Wales, Victoria, Queensland and the other states and territories each have their own Retirement Villages Act. That affects your mandatory disclosure documents, cooling-off period, the maximum time an operator can take to repay your money, and how capital gains and losses can be treated. A contract that is standard in one state may not be permitted in another, so advice and comparisons should be state-specific. Your operator must give you standardised disclosure documents before you sign — read them alongside the contract.
| Option | You own | Exit cost | Best for |
|---|---|---|---|
| Retirement village | Usually a lease/licence | Deferred management fee | Community + services, lower upkeep |
| Downsizing to a smaller home | The freehold | Normal selling costs only | Keeping equity + capital growth |
| Staying put | Your current home | None | Familiarity; home is Age-Pension-exempt |
Downsizing has a super angle worth checking: proceeds from selling a long-held main residence can, if you are eligible, go into super as a downsizer contribution. See the downsizer contribution calculator for how that works, and remember your home is exempt from the Age Pension assets test while a village ingoing contribution is treated differently — model both in the retirement planning tool.
Take the contract to a solicitor and, ideally, an independent financial adviser before committing — the numbers turn entirely on the specific clauses, and a village is one of the harder decisions to reverse.
Do the numbers before you commit. Retirement-village pricing is contract-specific and the exit fee is where the real cost hides. For the official plain-language explainer of village fees and contracts, see ASIC MoneySmart — Retirement villages. This guide is educational information, not financial or legal advice.
There is no single figure, and the sticker price is not the real cost. You typically pay an ingoing contribution to move in — often priced similarly to buying a comparable unit in the same area — plus ongoing recurrent charges (like body-corporate fees) while you live there.
The cost that catches most people out is the deferred management fee, or exit fee, deducted when you leave. Two units at the same ingoing price can cost very different amounts over a stay, depending on the exit-fee formula in the contract, so the contract terms matter more than the headline price.
Always model your own numbers against the specific contract.
A deferred management fee (DMF), also called an exit fee or departure fee, is an amount the operator keeps when you leave the village. Instead of paying it upfront, it accrues over your stay — commonly as a set percentage for each year (or part-year) you live there, up to a capped maximum after a number of years.
The percentage, the cap, and whether it is calculated on your original ingoing price or the eventual resale price all vary by contract and operator. Because it accrues over time, the DMF is the single biggest reason a retirement village can be far more expensive to leave than it looked to enter.
Usually you get back your ingoing contribution minus the deferred management fee and any agreed deductions (such as reinstatement or refurbishment costs and a share of the sale/marketing costs). Whether you also share in any capital gain — or wear part of a capital loss — depends on the contract: some contracts give the resident the gain, some give it to the operator, and some split it.
There is often a wait, too: in many contracts the refund is only paid once your unit is re-sold or licensed to a new resident, though several states now set maximum timeframes. Check the exit terms before you sign, not when you leave.
A retirement village is generally best understood as a lifestyle and housing decision, not an investment. Because of exit fees and limited or shared capital growth, the financial return is usually lower than owning a home outright — the trade-off is buying into a community with services, security and lower maintenance.
Whether that trade-off is worth it depends entirely on your priorities, health, and finances. This is educational information, not financial advice — read the contract with a solicitor and consider independent financial advice before committing.