A significant shift is underway in the preferences and expectations of retirees towards their living arrangements. Gone are the days when retirement living options were limited to smaller homes, apartment-style nursing facilities, or the traditional expectation of living with children.
Today, lifestyle retirement villages are emerging as the preferred choice for those seeking a blend of security, healthcare, and leisure. This transformative trend reflects a deeper understanding of what today’s retirees desire.
Lifestyle retirement villages
Modern lifestyle retirement villages and estates are pushing the boundaries on what they offer their residents. These modern facilities prioritise not just the physical security of their residents, but also ensure discreet healthcare services and financial peace of mind. Today’s retirees seek more than a place to live; they look for communities offering top facilities and services that cater to their lifestyle choices. This trend reflects a broader, global preference for retirement villages designed to support an active, engaging lifestyle, emphasising the importance of community, convenience, nature and the outdoors as well as care.
The importance of scale
Another shared trend in both international and South African contexts is the recognition of the importance of scale in retirement villages. Communities ranging from 150 to 350 units are becoming the benchmark, as they strike a balance between being large enough to offer attractive services and amenities, and small enough to maintain a sense of community. This scale is also seen as a viable way to combat levy inflation, ensuring that operational costs are spread over a larger base, thus keeping the individual costs to residents at a more manageable level. Smaller villages and operators, on the other hand, face significant challenges related to operating costs and escalated levies, making scale a critical factor in the sustainability and attractiveness of retirement living options.
Life Right purchase model
The Life Right purchase model is increasingly being adopted as a preferable option for retirees, offering them security of tenure for life. Under this model, the property remains under the ownership of the developer, who is responsible for the management and maintenance of the estate. This arrangement not only provides retirees with peace of mind regarding their living situation but also offers flexible pricing options. Purchased at a discount in exchange for a reduced capital return upon leaving the village, it presents an attractive proposition for many looking for secure, hassle-free retirement living.
Technology and smart homes
A notable trend that spans across borders is the integration of technology and smart home features in retirement villages, designed to allow residents to age in place comfortably. The modern retiree demands stylish, modern homes that not only cater to present needs but can also be easily retrofitted to accommodate future requirements as they age.
High-speed internet access, work-from-home capabilities, and access to technology are now standard expectations, extending independence and enhancing the quality of life for residents. This global trend towards technologically equipped homes in retirement villages underscores a growing desire among retirees to maintain an independent, connected, and active lifestyle.
Now, while there are some universal themes, specific trends can vary significantly from one country to another, here we delve into the key retirement trends on the international stage and compare them with the situation in South Africa.
Increasing retirement age
Globally, there’s a noticeable shift towards increasing the retirement age. This trend is partly due to longer life expectancies and the financial necessity of supporting a longer period of retirement. For instance, in many European countries, the retirement age is gradually being pushed beyond 65, with policies in place to encourage or even require longer work lives.
The retirement savings gap
A worrying trend in many countries, including the United States, is the growing retirement savings gap. Fewer than half of Americans are actively saving for retirement, according to Census data for 2020. This gap is attributed to various factors, including economic volatility and a lack of financial literacy regarding saving for retirement.
Shift towards defined-contribution plans
There’s a global shift from defined-benefit plans, where retirees receive a set pension from their employer, towards defined-contribution plans, where the retirement payout depends on how much has been contributed over time. This shift transfers the risk from employers to employees, making retirement incomes less predictable.
Aging workforce
The workforce is aging worldwide, with significant implications for economies and societies. By 2040, it’s projected that almost half of the population in some countries will be over the age of 40, leading to a larger proportion of older workers.
The South African retirement market is different and has slightly different needs. We take a look at retirement from a South African context affecting the trends.
The retirement time bomb
South Africa faces a stark retirement readiness challenge, with only 6% of the population on track to retire comfortably. This statistic, from the 10X Investments Retirement Reality Report 2023/2024, highlights a critical issue facing the country: a lack of sufficient planning and saving for retirement.
Economic and inflationary pressures
South African retirees and those nearing retirement are navigating a complex economic climate marked by inflationary pressures. The majority have not formally planned for retirement, exacerbating the challenge of ensuring a stable and sufficient retirement income.
Recognition of retirement planning’s importance
Despite these challenges, there’s a growing awareness among South Africans of the importance of having a retirement plan. Efforts are being made to educate the population on saving, the power of compound interest, and the critical nature of starting retirement planning early.
The retirement landscape, both globally and in South Africa, is undergoing significant transformation. While there are some challenges, there is also an increased awareness for proactive planning and a positive shift in the way retirees live. Lifestyle estates, secure open spaces within nature and active communities are leading the way retirees live.
