One of the primary risks to a financially-secure retirement is the rising cost of healthcare. Paying for a healthcare facility can be the largest expense of their entire lives for people in retirement. For those who are not in retirement, inflation costs add an additional level of concern. Now is the time to plan for any future health care needs.
Four Levels of Long-Term Care
The baby boomer generation is currently living in and approaching retirement. The U.S. Department of Health and Human Services estimates that those who are age 65 and older will increase from 46.2 million in 2014 to 82.3 million in 2040. In addition to an increase in population, the life expectancy is expected to increase also, leaving many seniors who will require medical and personal care services, including long-term care facilities.
There are four different levels of long-term care based on needs:
- Nursing Homes – for those who require more intensive medical and physical services.
- Assisted Living Facilities – for those who need assistance need assistance and personal care as needed, but desire a more home-like setting.
- Continuing Care Retirement Communities – for those who wish to wish to live in a community that is geared toward all levels of long-term care.
- Home Health Care Services – for those who wish to stay in their own homes and will use home health aides, nurses, and therapists.
A Closer Look at Assisted Living Facilities
Many seniors are able to live alone. They just need a little help from time to time. Assisted living is designed to provide a range of long-term care services based on a resident’s unique physical and social needs. Some assisted living services may include:
- Three meals a day in a common dining area
- 24-hour supervision, including alerting staff when help is needed in private quarters
- Personal care services such as haircuts, manicures, or pedicures
- Medication management or assistance
- Recreational, exercise, and spiritual activities
- Laundry and housekeeping services
- Transportation for shopping, doctor visits, or other locations
Selecting an Assisted Living Facility
Just as neighborhoods can vary greatly on amenities and price, so can assisted living accommodations and services. While some facilities may offer private apartments, other may provide rooms with a shared bath. Services also vary. Some may provide 24-hour transportation where other facilities offer limited transportation destinations and times.
When selecting Discuss different assisted living facilities with those who may have had experiences with them, such as doctors, nurses, family, and friends. The National Center for Assisted Living can also be another source for information.
Once the list of assisted living facilities has been narrowed down, a visit to several of the facilities to meet the staff, look over the grounds, and talk with the residents is best. Be sure to ask questions pertaining to staffing, services, activities, meals, and other items that will have an impact on quality of life.
The Cost of an Assisted Living Facility
Based on location, accommodations, and the types of services provided, the cost of an assisted living facility can vary significantly. According to Genworth 2016 Cost of Care Survey, the median cost of an assisted living facility across the nation was $44,184 annually or $3,628 per month for 2016.
In addition to the monthly fee, there may also be an entrance fee and other costs for services that are not provided in the basic monthly fee. Dementia care services are an example of services that may not be included in the monthly fee.
Continuing Care Retirement Communities
A residential community that serves different levels of senior living, from independent living to nursing home care, is classified as a continuing care retirement community (CCRC). A CCRC provides a range of services and living situations based on a resident’s changing needs over time. For a senior who wants the security of being cared for in the same community throughout their aging process, a CCRC is often the best solution.
Housing choices begin with independent living in apartments, townhouses, or homes and end with nursing home accommodations, with all different types of assisted living in between. Services appropriate for each type of level of care are also provided.
Selecting a Continuing Care Retirement Community
When entering a CCRC, many communities require that a resident sign a life-care contract. This means that the resident pledges to live the remainder of their life in the community. CCRCs vary on the policies pertaining to refunds when some residents leave or when the eventually die. CCRCs also offer different contract options that deliver different levels of care. A meticulous review of the CCRC contract should take place before anything is signed. This includes information on the CCRC’s finances. Depending on the type of contract, substantial tax deductions may be available. Before signing any CCRC contract, seek the advice of an attorney or a financial planner who is familiar with CCRC contracts and the implications.
Even though a continuing care retirement community seems quite expensive, the return benefits are the peace of mind knowing that all of the appropriate types of housing and care are available for the rest of a person’s life. Religious organizations, fraternal orders, ethnic groups, and other non-profit agencies operate continuing care retirement communities.
A newer and less expensive addition is the continuing care at home (CCAH) program. CCAH provides a variety of home care services to help with household errands and chores, transportation, and in-home nursing services. Future access to assisted living or nursing home services is also available with CCAH.
Cost of Continuing Care Retirement Community
The entrance fees for CCRCs can range from $20,000 to $500,000 or more. Whether a resident owns or rents their housing unit, the size, type, and location of the housing unit selected is also a factor. Monthly maintenance fees also add a between $500 to $4,000 or more per month.
The continuing care retirement community cost depends on whether the contract signed provides services such as unlimited health and long-term nursing care, a specific amount of these services, and whether or not health and long-term nursing care services are paid at current market rates, and only when needed.
As with any complex decision, talking about wanted results and financial goals with a qualified financial advisor will lead to a happier and financially secure retirement.