In the know.

What does it cost? The real costs of moving into a Retirement Community.

Congratulations, you have finally made it- it’s time to enjoy retirement! Could moving to a retirement community be the right fit for you? Well, how would you like access to great food, housekeeping, home maintenance and no more yard work? Don’t forget about priority access to quality care if needed. Sounds great, right? But, what does it cost?

You’ll find that there are ultimately two different types of financial contracts that you might enter into. Either a rental contract or an entrance fee contract. So, what’s the difference?

Rental-

In a rental agreement you can expect to pay for your monthly services as well as your housing costs all rolled into a monthly fee. In a rental agreement you might find that there is a small up front deposit but you’ll simply pay for your contracted services on a monthly basis. The thing to be aware of is that this contract does not often come with any significant discounts or rewards when you move from your Independent Living into a higher level of living like Assisted Living, Memory Support or Skilled Nursing. Additionally, because this is a month to month payment structure, the monthly fee is often considerably higher than the monthly fees for the same services in an entrance fee contract.

Entrance Fee-

In an entrance fee contract you’ll find that the agreement calls for a large up front deposit that is largely refundable. Refundable portions are often 70-90% when the resident leaves the community. These fees might be similar to the cost of a home value in the area. The entrance fee might start at $200K or more depending on the residence that you select. The benefit to placing this type of investment with the community is an exchange for significantly lower monthly fees than what is found in a rental community. In some entrance fee communities you’ll also benefit from deep discounts for care down the road.

How to compare-

Upon first glance, many people assume that the rental contract offers the best value because there is no large deposit. However, when you put the pencil to the paper, many find that the refundable portion paired with the discounts for care leave the resident at a financial advantage that can be in the six figure range when they live at the community for the average length of stay in each level of care. When budgeting, you should consider that you will live 7 or more years in Independent Living, at least 2 years in Assisted Living ($5,500+) and a minimum of 2.5 years in Skilled Nursing ($8,000+). If you suspect that Memory Support ($6,500) is in your future, you might budget for 18 months to 2 years in that care level. When you apply a discount of 10% for Assisted Living, 15% for Memory Support or 20% for Skilled Nursing as an example, you’ll quickly see the value of the refundable entrance fee stacking up in your favor.

In order to really learn the best fit for you start by scheduling a community tour where you can ask detailed questions about the pricing and services available in your area. Calculate the costs of living in your home now and then add the costs that might be incurred for you to bring similar services into your home. When considering the costs of continuing to age in your current home, don’t forget about the other costs involved like the cost of peace of mind, cost of loneliness and cost of not having plan for possible care down the road.

So, could a retirement community be the right fit for you? For your budget? Do the research and be informed so that you can make the best plan for an excellent retirement.

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