Issue Date: July 20, 2003
Soar on
Continuing-care retirement communities are a great choice for some seniors.
One of the biggest money decisions most of us will face, at some point, is how and where to retire. Whether you are calculating how much money you need to sock away now or are helping your parents or other older relatives research their options, you'll probably check out continuing-care retirement communities (CCRCs) along the way.
You're investing in both real estate and elder care.
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Most CCRCs offer apartment or one-story living, plus common rooms, dining halls, exercise facilities, a pool and transportation. More important, they also offer on-site assisted living (help with laundry, meals and bathing) or skilled nursing care, so residents can be monitored if their health falters.
With more than 2,100 CCRCs in operation (and 20 more opening their doors each year), how do consumers find the right fit? Through careful research, because no two communities are exactly alike, and there are no federal regulations on how they need to be run, says Joseph Matthews, a lawyer and the author of "Choose the Right Long-Term Care" (Nolo Press, $21.99). The final complicating factor: When you buy into a CCRC, you're making two investments simultaneously -- one in real estate, the other in long-term care -- so you need assurance that both are sound.
Who's it right for? "People in good health today who expect that in five or 10 years their need for care could change," Matthews says. "And people who don't want any surprises." CCRCs tend to appeal to couples who want to be able to stay together if one falls ill and to people with no children nearby (or none able) to care for them as they age.
How much will it cost? It can be a pricey proposition. Entrance fees range from $50,000 to $300,000. The lower end is run by churches and not-for-profits; the pricier ones are private. That fee allows consumers to lock in prices for the assisted-living and nursing care they may need later. (In pricier cases, the fee may include an equity stake in the property; in the less expensive ones, there's generally no ownership stake. Also check to see if heirs will get back any of that fee.)
Then you'll pay a monthly fee for the apartment itself. The median monthly fee was a bit under $3,000 last year, but that varies by contract type. It typically will be higher than that if you opt for an all-inclusive contract that factors in all your care rather than one where pre-paid nursing care is limited or where nursing care is paid for on an as-needed basis. The flip side? Once you begin needing that nursing care, the monthly outlay stays the same in an all-inclusive contract but can skyrocket under a fee-for-service contract.
What's the risk? There are two biggies. The first is getting financially locked into a place that you later decide you don't like. If you're buying an equity stake in a community, you need to know what happens if you decide to move. Is that equity transferable? And, if so, under what conditions? All of those elements should be spelled out in the contract you sign, Matthews notes. The second risk is that the facility suffers financially during your tenure and that the care deteriorates, too. "You're talking about making a commitment to a place that has to stay together for 10 or 15 years for it to pay off for you. It's hard to [predict that] finance-wise or management-wise," Matthews says.
How can you best protect yourself -- or your parents? First, by taking a very careful look at any facility you're considering. Remember, says Elinor Ginzler of AARP, that although you or your relatives are healthy now, as the years pass, you might need assistance. "People have an amazing ability to deny that," she says. "So when you take the tour, don't just tour the independent little cottages. Make sure you see the nursing setting. People can have very accurate reactions just by that visit."
Next, check out the CCRC's financials. Any community that has passed muster with the Continuing Care Accreditation Commission -- which involves a year-long evaluation process looking at both care and financial strength -- is a good bet. The accreditation process is fairly new and completely voluntary. So far, 340 of the nation's 2,100 facilities are accredited through CCAC; you can find them at www.ccaconline.org. Standard & Poor's evaluates facilities' financial health: See www.standardandpoors.com. Also visit your state's long-term-care ombudsman at ltcombudsman.org. This site doesn't rank particular facilities, but it provides all sorts of local resources.
Finally, have the contract double- checked by your financial adviser, lawyer or (preferably) both. Notes Ginzler: "This is the document that binds you to the community and the community to you. You really want to have a clear understanding of what's covered and how things are paid for. The more people who put their eyes on your contract, the better." If all goes well, however, continuing-care communities can be an exciting -- and flexible -- place to spend your later years, Ginzler says. The fact that your housing evolves as you age can mean less stress. And that's precisely when less stress is best.
Jean Sherman Chatzky is the author of "Talking Money" (Warner Books, $24.95). Additional reporting by Brian B. Reid.
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