Most people understand there are trade-offs between buying and leasing a car. The same is true for retirement communities: entry-fee, equity (ownership), and rental models each carry distinct advantages and disadvantages. Over the next few weeks we will explore these different senior living options in detail to help you decide which might suit your needs.
This week we focus on rental retirement communities.
Rental retirement communities
Rental retirement communities make up the majority of senior living options in the United States. These communities can specialize in one level of care—such as independent living, assisted living, memory care, or skilled nursing—or offer multiple levels under one roof. Some rental communities are structured as continuing care retirement communities (CCRCs), providing a range of care levels as a resident’s needs change.
Like renting an apartment or house, residents in rental retirement communities sign a lease and pay a monthly rental fee. The monthly cost typically varies with the level of care a resident requires—the more assistance needed, the higher the fee tends to be.
Monthly rental fees often cover not only the residence and caregiving services but also a variety of supportive features and amenities, such as:
- Exterior maintenance and, in some cases, interior upkeep
- Housekeeping services
- On-site wellness programs and social activities
- Some or all utilities
- Scheduled transportation
- Emergency call systems and monitoring
- Security services
- One or more daily meals
It’s important to understand the limitations of many rental communities. Even when a community offers multiple levels of care, it often has no contractual obligation to provide higher levels to an existing resident. If a resident’s needs exceed what the community can safely provide, they may need to relocate to a facility with appropriate services. Additionally, long-term care services provided on-site are usually billed at full market rates.
>> Related: Answers to Common Questions About 55+ Active Adult Communities
The benefits of a rental retirement community
- No large upfront entry fee (though most communities require a deposit or initial community fee)
- Greater flexibility because there is typically no long-term contractual commitment
- Access to many amenities found in entry-fee communities without the upfront cost
- Generally no medical eligibility or extensive financial qualification required
- Ability to preserve and control liquid assets
The drawbacks of a rental retirement community
- May lack higher levels of on-site care, which can necessitate another move
- No guarantee of progressive, increased care levels for current residents
- Residents whose assets become depleted may be required to leave
- Monthly rent can rise at lease renewal
- Future care costs can be difficult to predict
>> Related: How to Differentiate Between Rental Retirement Communities
Next week we will cover the pros and cons of equity (ownership) retirement communities to help you compare that model with the rental option.