Most car owners know that there are pros and cons when it comes to buying versus leasing a car. The same is true for entry fee, equity, and rental retirement communities: Each senior living model has potential advantages and disadvantages for residents. In the coming weeks, we will take a closer look at each of these types of retirement communities to help educate you on which one might be right for you.

This week, we examine…

Rental retirement communities

The majority of senior living communities in the U.S. are rental retirement communities. These communities might offer exclusively independent living residences, assisted living, memory care, or skilled nursing care. There are also rental continuing care retirement communities (CCRCs), which provide a combination of these levels of care depending on the resident’s needs.

Much like renting any house or apartment, rental retirement communities’ residents sign a lease agreement and then are charged a monthly rental fee. Typically, the higher the level of care needed (if any), the higher the monthly cost will be.

In addition to covering the cost of the residential unit and whatever level of care the resident requires, this fee might also include things like:

  • Home maintenance (exterior and possibly interior)
  • Housekeeping services
  • On-site wellness and social activities
  • Some or all utilities
  • Transportation
  • Emergency call monitoring
  • Security
  • A meal or multiple meals each day

But bear in mind: Even if a rental retirement community does offer more than one level of care (assisted living and skilled nursing care, for instance), these communities usually have no contractual obligation to provide an increased level of care to an existing resident. For this reason, it may be necessary for a resident to move to a different community if their care needs exceed what the rental retirement community is able to provide. Additionally, residents will always pay the full market rate for any long-term care services they receive on-site.

>> Related: Answers to Common Questions About 55+ Active Adult Communities

The pros of a rental retirement community

  • No large upfront entry fee (though most will have an initial security deposit and/or community fee)
  • No long-term contractual obligation — the flexibility to move for any reason
  • Many of the same amenities as an entry fee community without the upfront expense
  • Usually no medical eligibility requirements or financial qualification process
  • Maintain control of your liquid assets

The cons of a rental retirement community

  • May not have higher levels of care on-site, which can necessitate another move
  • No contractual guarantee of progressive levels of on-site care — may require an additional move
  • If a resident’s assets are depleted, they typically must move out
  • Monthly rent rates can increase with lease renewals
  • Unpredictability of future care costs

>> Related: How to Differentiate Between Rental Retirement Communities

Next week, we will examine the pros and cons of an equity retirement community, also called an ownership retirement community.

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