“What’s Fair?” - Older adults on the costs of later living
Exploring how older adults really feel about paying for retirement community living - and why the deferred management fee needs more clarity
As more older adults consider the move into Integrated Retirement Communities (IRCs), clarity around cost is becoming just as crucial as comfort, care, or community. In our latest round of qualitative research with those aged 70+, we dug deeper into what people really think about the financial side of later life living - particularly around that all-important question: how do they expect to pay?
“Tell me exactly what I’m paying for.”
That was a recurring sentiment from our interviewees. Whether cautiously curious or already settled in a retirement development, the request was the same: clarity. People want to understand, line by line, what they’re being charged for - both upfront and ongoing.
What costs do they expect?
Unsurprisingly, most anticipated a service charge to cover things like grounds maintenance, communal areas, and possibly even access to shared facilities like gyms or dining rooms. Some assumed there might be options for additional services on a pay-as-you-need basis, like domestic help or care.
However, few were fully across the concept of the Deferred Management Fee (DMF) - and fewer still felt comfortable with it at first encounter. One commented:
"You don't get anything for nothing... but it still needs explaining"
The DMF - a one-off fee paid upon the sale of a property, typically calculated as a percentage of its value - is designed to cover long-term costs like refurbishment and capital improvements. But for many, it raised questions rather than comfort.
Some welcomed the principle, recognising the need for developers to recoup costs without hiking up monthly fees:
“In this day and age, you don't get anything for nothing. You've got to understand that the company providing the facilities needs to return a profit, and therefore I would personally have no objection to it.”
Others, however, struggled with the idea of paying what felt like a “hidden” fee, especially when the sums involved could significantly impact the inheritance left to loved ones:
“The disadvantages are a huge percentage, or 20%, of the value of your property going instantly.”
A number voiced concerns about the fairness and transparency of the calculation:
“My only concern would be how long I lived after signing the agreement, because what happens if you run out of money? If your estate comes to a close, are your family then responsible?”
DMF or Monthly Fees - what’s the balance?
When asked whether they’d rather pay a higher monthly fee and a lower percentage as a DMF or vice versa, responses were mixed - and often influenced by current health, financial resilience, and views on legacy:
Some favoured deferral, seeing it as a way to free up income in the here and now:
“I think a higher deferred payment would be my choice. Then I think management fees go up quite a lot each year… I'd rather keep more savings.”
Others preferred to keep things straightforward and upfront, particularly those who disliked the idea of leaving a surprise fee for family to handle:
“I personally would prefer to pay more at the time, as I have every intention of handling the matters surrounding my current dwelling independently.”
Rent or Buy?
Ownership offers control - but not always peace of mind. When it comes to tenure, the majority leaned towards ownership. Reasons ranged from financial (property as an appreciating asset) to emotional (a sense of permanence and control). For example:
“We’re perfectly happy with owning our own apartment; it means we can do what we like with it.”
But there were dissenting voices - those who saw the benefit in not tying up capital, or who wanted to avoid burdening family with the task of reselling a property later down the line:
“If you merely rent it, on death, there is no financial burden on your family.”
In summary
It’s not just about the fee - it’s about fairness.
Across the board, one thing was clear: this generation isn’t afraid to ask questions. And when it comes to the DMF or service charges, what they’re asking for isn’t special treatment, it’s transparency.
They want to see projections, understand where their money’s going, and be given choices that reflect their values - whether that’s living comfortably, leaving a legacy, or simply knowing they’re getting what they pay for.
source: Boomer + beyond_Living well later_qualitative research study_2024/25