Financial metrics for comparing Australian retirement villages

Timothy Kyng*, David Pitt, Sachi Purcal, Jinhui Zhang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Retirement village contracts are complex, blending together financial options on real estate, life annuities and life insurance. We analyse the structure of the cash flows involved in a retirement village contract and distil the cost components into an equivalent monthly comparison rent. In general, we observe lower monthly rents when the maintenance fees and deferred management fees are lower, when higher rates of capital gain are evident, and, importantly, when retirees reside in the retirement village for a longer period. Our analysis provides a framework to meaningfully compare the relative merits of the finances incorporated into retirement village contracts.

Original languageEnglish
Number of pages31
JournalAccounting & Finance
Early online date10 Mar 2021
DOIs
Publication statusE-pub ahead of print - 10 Mar 2021

Keywords

  • Financial metrics
  • Life annuities
  • Life insurance
  • Real estate options
  • Retirement village contracts

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