As an estate planning attorney, I often caution clients to beware of backyard advice. Those tidbits of information well-meaning neighbors, family and friends often share about subjects outside their expertise. So too should you be wary of accepting at face value what others may say about living at a senior community, especially when it comes to finances. It’s important that you satisfy yourself with good information before making a decision – one way or the other – to live at a community.
Toward that end, I offer what I perceive are the 10 biggest financial misperceptions about living in a senior community, followed by my rejoinders.
1. They’ll say whatever it takes to entice me to move in.
Not true, in fact my experience is that most communities undersell themselves. Why’s that? Because unlike most purchases where there’s a single transaction, moving to a senior community is an ongoing commitment between you and the community. If you buy a car, the salesman waves goodbye to you as you leave the lot and you may never see him again. But at a community, you’re likely to interact with residence counselors time and again. The last thing they want is an unhappy resident, and so they usually don’t make promises they can’t keep.
2. If I run out of money, they’ll kick me out.
Most continuing care retirement communities are not-for-profit. Those that are often have benevolence foundations to help subsidize those persons who run out of assets through no fault of their own. Further, it’s really bad publicity if a community garners a reputation for forcing residents to move out if they run out of money. So most communities do a very good job of ensuring you have adequate resources to live there for the rest of your life.
3. I won’t be able to leave any money behind for my children’s inheritance.
The exact opposite is true, especially when there is a refundable entrance fee. I analogize it to a safe deposit box. The money is there. It’s contractually guaranteed. If you move out or pass away, it’ll be refunded pursuant to your instructions. Moreover, personal budgeting based on steady pricing allows people to manage their money more effectively. There’s no risk that a pipe may burst and cause a flood or that you’re driveway will need repair for which you have to pay an unexpected bill.
4. Community living costs more than living by myself in a house.
If you conduct an honest financial audit of living in a house, you’ll likely discover that living in a community is a bargain. You won’t have to pay for upkeep, maintenance, new this and new that, homeowner’s insurance, homeowner’s association dues, property taxes, lawn care, snow removal and so forth. Also, by living in a house you’re subjected to economic forces beyond your control that can depreciate the value of your house, e.g., anemic economy, underfunded school district, weather disaster, neighborhood foreclosures, a notorious crime, etc. Seniors who live in houses typically pay thousands of dollars each year merely to sustain the value of the house, not necessarily grow its value.
5. If I don’t like my residence, I’m stuck, there’s nothing I can do.
As noted, the last thing that communities want are unhappy residents. If you prefer to have the sunshine in the morning and not the evening, then communities do their best to accommodate your desires. If one spouse dies and you no longer need a two bedroom apartment, most communities will make every effort to find you a one-bedroom and it’ll usually come at a reduced price.
6. They say they’ll refund my entrance fee, but probably won’t.
Those communities that offer refundable entrance fees have excellent performance records when it comes to fulfilling contractual obligations. It only makes sense. If word spread that they didn’t refund entrance fees as promised, they would be out of business in short order.
7. They’re only after my money, they don’t care about who I am as a person.
As noted, many senior communities are not-for-profit and they’re usually mission based. They memorialize in writing that their purpose is to provide quality and caring services to senior citizens. It’s not at all uncommon for seniors and staff to emotionally bond as they go through their daily lives. Further, many employees work at senior communities because of the fulfillment they derive from making a difference in individuals’ lives.
8. I don’t need to live in a community if I have long-term care insurance.
I often tell audiences that long-term care insurance is a financial benefit, but it’s not a long-term care plan. Insurance has nothing to do with where you live, your quality of life or the quality of care services you receive. Moreover, at many communities that offer assisted living and long-term care services, long-term care insurance kicks in and defrays costs so that additional money can be directed toward investments for legacy preservation. Long-term care insurance can also help you financially qualify at many communities.
9. Everything costs extra when you live a community.
Not true. Most communities offer at least one meal a day at a number of different dining venues within the community campus. Entertainment, cultural enrichment programs and many classes are offered at no additional charge. Here’s a list of those items that are typically included at a senior community at no extra charge:
All maintenance – residence inside and out, the grounds and community spaces (I often tell audiences that if it was there before you were, it’s their problem not yours)
Weekly flat linen laundry
Emergency response system – in residence and throughout community
Basic cable TV
Wi-Fi internet in common areas and computer centers
Small pets allowed
Library with computers and Wi-Fi Internet
On campus banking
Fitness and exercise rooms and studios with state-of-the-art equipment
Heated swimming pool and hot tub
Garden areas and walking paths
Arts and crafts studio
10. I’m perfectly healthy, it doesn’t make financial sense to move to a community that offers assisted living or skilled nursing care.
If you think you’d like to live in a community, don’t wait for a medical emergency to do so. It pretty much guarantees that you’ll pay top dollar for accommodations and services. The time to move in is when you’re healthy, because you can qualify for those plans that allow you to avail yourself of assisted living or long-term care without incurring monumental extra costs. Also, given the enriched lifestyle most communities offer, you don’t want to miss out on those fun events while you still enjoy good health.