Planning for Living in a Retirement Community

“You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”   – Yogi Berra

Last month I wrote about considerations of planning to live in your own home in late-retirement. This month I will address the option of planning to live in a community environment. If you want to read in more depth than I will cover here, get the $7 book What’s the Deal with Retirement Communities by Brad C. Breeding.

When considering a retirement community, the first things to consider are whether the size, location, atmosphere and health care services match your needs and desires. You want to know what the facility provides along the Continuum of Care. But first you have to know that Continuum of Care is the increasing level of health care services available as you age. The range of support levels in retirement communities are independent living, assisted living and round-the-clock skilled nursing care.

• Independent Living – this is occasional assistance with daily chores.

• Assisted Living – this is non-medical care to help you with the six Activities of Daily Living. Those activities are eating, bathing, dressing, toileting, transferring (walking) and continence. It often includes access to health care.

• Skilled Nursing Care – this is care from a Registered Nurse including giving IV drugs, shots and the like, providing 24-hour care.

• Memory Care – this is a growing area with facilities for those with Dementia and Alzheimer’s.

Keeping those support level ranges in mind, we turn to the ranges of retirement community living.

Active Adult Communities

Members own their own homes. You would take care of the interior of your home and do your own household chores. Your exterior maintenance is taken care of by the Home Owners Association. 

 Independent Living Communities

These are also called rental retirement communities or supportive living communities. You are in rental housing and there are no entry fees and no requirement to buy your housing unit.

Senior Living Apartments

These are thought of as the most affordable option from Independent Living Communities. You have fewer services provided. Specifically, these apartments do not provide meals.

Continuing Care Retirement Communities (CCRC)

These are full service retirement communities. As a resident here, you would have a broad range of services along the full Continuum of Care described above. Choosing a CCRC is a daunting and complex decision.

Regardless of where you choose to live, you still must confront your own lifestyle and health care issues associated with aging. The question you have is whether to live at home or in a community. If you wish to consider a community residence, do you want one that is equipped to support your increasing needs for care when the time comes, or do you want to move to another facility? And, of course, are you willing and able to pay for this existing range of services?

There are four issues to think about when deciding whether to move to a CCRC

1. Does the residence contractually guarantee a Continuum of Care? This would include a contract between you and the community. The contract is called a “Residency and Care Contract.”

2. You will pay at least one fee, perhaps two. Fees come in two types. The monthly service fee is pretty much assured. Virtually all CCRCs have this. The entry fee is common but not universal. Entry fees range from less than $50,000 up to $1,000,000 and above. According to the National Investment Center (NIC) NIC Investment Guide – Investing in Seniors Housing & Care Properties, 2^nd Edition, 2012, the national average entry fee for a CCRC is about $240,000. Local entry fees will probably differ. Entry fees might be tax deductible. You should check with a tax CPA before plunking down your money.

3. You must be able to live independently when you enter a CCRC and sign a continuing care contract. These facilities are self-insured. This means that if a higher than expected percentage of residents require more care, the facility could run into financial challenges.

4. You will have to get through a financial requirement hurdle. The owners of the facility want some assurance that you will be able to pay the monthly fees plus any additional fees that you might incur regarding health care.

Not all CCRCs have entry fees, but those that do can have one of three types of entry fee contracts. Do not assume that the highest entry fee indicates the facility will cost the most over your lifetime. A higher entry fee may mean the monthly fees will not increase when you need to move into the facility’s health care center.

There are other important considerations when looking into a CCRC. If you want more depth of information than I can provide here, read Mr. Breeding’s book. He goes into significant depth without being boring. You will want to know such things as the …

• facility’s financial viability
• management team’s experience
• accreditation status
• type of resident contract
• financial ratios
• occupancy level
• actuarial analysis
• ratio of independent to health care residents

Making the decision of where to live during your late-retirement years is a very important undertaking. There are many aspects to research and consider. They all impact your lifestyle and comfort in your later years. Mr. Breeding’s book goes into suitable detail about the issues I have outlined above as well as additional factors, such as whether your long-term care insurance will be accepted at a CCRC. If you are likely to face the decision of where to live, for yourself or for a loved one, I suggest you get his book and read it cover to cover.