Selling the family home and moving to a retirement village can free up capital and make for a better lifestyle, Retirement Villages Association executive director John Collyns says.
He was invited to Whanganui to speak at Thursday's Grey Power annual general meeting, and wanted to emphasise New Zealand's "world leading" consumer protection for residents.
He said the Whanganui-Manawatu region has fewer retirement villages than most parts of New Zealand - just 9.3 per cent of people over 75 live in one. The New Zealand average is 12.4 per cent, but the percentage is higher in places where property is very expensive.
In regions with lower property prices it's hard to keep the price of a retirement village unit affordable. It's usually between $200,000 and $400,000 - two thirds to three quarters of the price of a freehold townhouse.
About 20 per cent of people selling up the family home and moving into a retirement village free up more than $200,000 of equity. Only five per cent of those selling to buy a freehold unit are left with that much.
Retirement village units are typically smaller than other new houses - in 2013 new houses averaged 185 square metres. Retirement village units are typically one or two bedroom, better insulated, warmer and easier for an older person to move around in.
People moving into a retirement village don't own their unit. Instead they buy a licence to occupy it. When they don't want it any more they can move out.
The licence is then terminated and the retirement village operator refurbishes and sells the unit. If they've been there for three years or more they get 70 to 80 per cent of their licence price back.
The 20 to 30 per cent not repaid to them is a "deferred management fund" - the cost of the facilities they have shared while living there.
People who have lived there for less time get less of their licence price back.
Residents pay the village a weekly fee that covers rates, insurance and staff wages. This can make living there cheaper than living in unit they own.
If the retirement village is sold their contract must be honoured by the new owner, and they cannot be evicted.
People buying a licence to occupy are required to consult a lawyer first, to ensure they understand what's entailed.
"The lawyer then has to sign an affirmation to say they have given the residents advice, so the resident is taking the decision with full disclosure," Mr Collyns said.
He planned to give Grey Power members some guidelines about getting into a retirement village. He said it was important to make the move while still able to make new friends.
Most people moved to a retirement village near their previous home, in order to maintain relationships.
In 1991 more than 85 per cent of people aged 60 to 64 owned their own home. That percentage is reducing now, and affording a unit in a retirement village is difficult for people with no property to sell.
The association is working on ways to make units more affordable - perhaps by renting them out or by lending money to people who can't pay for a full licence. It will need government help with this, Mr Collyns said.
New Zealand's ageing population means many more retirement units will be needed, especially in Auckland, Hamilton and Tauranga. People moving into them should free up houses needed by homeless people.
Retirement villages have only become a mainstream choice for older people in the last 30 years. The owners of the villages are 70 per cent big corporations, with the rest private and not-for-profit organisations.
Older people like retirement villages for their security and companionship, and because any maintenance is done for them.
"Some people relish the move and find it really works for them. A minority find it's a disaster," Mr Collyns said.