One of the most important decisions of retirement is determining where to live and how to receive end-of-life medical care. As healthcare costs have skyrocketed, long-term care costs can easily derail a retirement plan. Though it is a subject that we all would prefer not to talk about, if you don’t have a plan, you are planning to fail.
This post will cover an overview of the main living options available during retirement, how they impact long-term care expenses, and discuss the important factors to weigh as you make your decision. I hope it will provide you food for thought as this decision is a crucial part of our stewardship responsibility.
The landscape of retirement living and receiving care has changed considerably in the past 20 years. There are now many more options to consider, at various price points. As there are so many possible variations, this post is meant as a more general overview of the major available options. Shopping around and asking a lot of questions can help you find the option that will suit you best.
With that in mind, there are three main options to consider: live independently, live in a community or a hybrid approach. Let’s take a look at each one of these.
1. Live Independently
A. Age in Place – Studies have shown that the majority of Americans would prefer to stay in their home as long as they can. Being in a familiar setting can be a tremendous benefit, enabling you to maintain friendships and community involvement. Having children who are willing and able to help with/organize care and having a good community in place can make this an appealing option.
However, as we age, our mobility decreases and it becomes harder to be engaged with the world around us. This can leave those who choose to age in place feeling isolated and alone. Simultaneously, the house may fall into disrepair as you are not able to maintain it as you once could, meaning your quality of life may decrease and the value may be lower when you are ready to sell.
There are many more in home care options available than ever before if you need medical help. Depending on the level of care and for how long, this could get quite expensive. If you need advanced medical care, that may require you moving to a facility, taking you away from the familiarity of home. If the medical need is sudden, it may be difficult to find a facility to accept you, forcing you or your family to find one further from your current home, thereby potentially increasing your isolation. Also, you or your family may need to coordinate care going forward, which can be overwhelming and exhausting as this is already a challenging time.
B. 55 Plus Community – This is a community open to those who are 55 and older who buy a home/townhouse/condo in a community setting. It is similar to aging in place, where you have the independence of living in your own home, but you are living in a community of people who are at a similar age and station of life. Oftentimes the main maintenance items (mowing lawn etc) are taken care of by the community (normally for a monthly/annual fee).
This option is fairly similar to aging in place in terms of potential concerns. The residents of the community do not normally have access to skilled nursing/advanced medical treatments in the community. I mention this because over the years of discussing this with clients, they often assume since it is a 55+ community that medical care is included, but generally it is not. If care is needed, you (or your family) would need to find a facility that was available to take you at that particular time. Sometimes that is easy, many times it is not.
2. Live in a Community – Continuing Care Retirement Community (CCRC) or Life Plan Community
This option includes the full spectrum of care that people will need all on one campus. Generally, people start living in an independent living unit (an individual house/townhouse/condo) and as their health needs increase, they move to areas that provide the care they need in the same community.
Having access to all levels of care on one campus, including skilled nursing, can help the spouse, family, and friends more easily visit them as their loved one’s medical needs increase. This type of community also normally provides extensive social opportunities and hobbies to reduce loneliness. In addition, most communities have individuals who can help you sort through your options so your plan of care does not just fall on you and your family. This allows your family to visit and enjoy the time with you, not stressing as much over decisions about your care.
However, this can be the most expensive option, as many times they require a lump sum payment upfront and an ongoing monthly amount as well. You are also hoping the community will maintain the facilities and keep staff trained well into the future when you may need care. If the community doesn’t continue to invest in facilities and skill training, you may potentially receive substandard care down the road. It also can limit your future flexibility as you are “tied” to one community. If you decide down the road you don’t want to live there anymore, you may lose some or all of your upfront payments (normally depending on how long you have lived there).
3. Hybrid – Continuing Care at Home (CCaH)
This is a relatively new option that enables you to live in your home for as long as possible, but if you need care, you could move into the CCRC (that provides all level of care) and even directly into their skilled nursing unit. Each CCaH is run by an established CCRC, and it combines the best of the CCRC and age-in-place options at a lower cost than the CCRC alone.
It requires a lump sum upfront and a monthly fee thereafter (normally less than a residential CCRC cost). You are assigned a care manager who is responsible for overseeing your situation and helping you address care needs as they arise.
The CCaH model is not very widespread, but PA has a few communities that run them (there are currently only 3 that I am aware of in the greater Philadelphia area). Due to the small number of participants, I would encourage you to ask lots of questions to ensure you understand how things will work.
There are a few points to consider. As you have limited access to CCRC social options, it may be more challenging to develop relationships in the community prior to needing to move there for care. This could increase your isolation when you need care. Also, if your spouse is still living in your home, it may make it more difficult for them to visit you regularly (due to distance and decreased mobility). You could end up paying all the required fees and then not use any of the services (though your estate may receive a prorated portion of the upfront amount back depending on how long the contract has been in force).
Important Points to Consider
With all of this in mind, what should you do? Here are several points to keep in mind as you work through this:
1. Don’t Wait Too Long
Oftentimes people delay this decision because they don’t want to deal with the reality of declining health and mobility we may face. This can impact you in two ways. First, if your health declines and a plan is not already in place, that may take some of your available options off the table. In the worst case scenarios, your family may have to make a decision for you, or the only available option is the one that you never would have selected yourself.
Second, if you decide to move to a CCRC, some communities have waiting lists for as long as 10 years. You may be ready to move, but the community isn’t able to accommodate you
It is best to be proactive about this and work to inform yourself on your options in your early 60’s so you have a foundation with which to make an informed decision.
Aging is difficult. As our world slowly gets smaller and smaller, our loneliness increases. A few years ago I had a client with a loving family, tell me she went to the grocery store every day just so she could be around people. Sadly, this happens all too frequently, and it can happen regardless of the option you select.
The two factors that I have seen help with loneliness is having a positive outlook (ie willing to make new friends) and living in a location where social interaction is easier. Know yourself and your tendencies, and be proactive in addressing them. This will help make our remaining time a blessing to ourselves and others.
3. How Do You Handle Change?
Some people can adapt better to change than others. Frequently, I see older people (think 80+) moving to a CCRC and struggle with that change. It can be helpful to move at a younger age when change is easier. Not only will this enable you to enjoy more of the community and establish friendships while you are active, but also provides a sense of home before you or your spouse need care.
As of 2017, only about 31% of Americans died at home. The fact is, most of us will have at least one move after retirement, potentially several. Determine how many moves you are willing to make, and where they will be. For example, if you choose to stay in your home, and you need skilled care down the road, you will be moving to an unfamiliar location often without anyone you know. While if you live in a CCRC, you are still in the same community as your friends, and your family can easily visit you.
4. Your Wife
This point is written specifically for the husbands. Women tend to live longer than men, meaning your wife will more than likely outlive you. Working on and implementing your plan (whatever that is) will ensure your wife will have everything in place in case you pass away.
What can be done? If you both want to stay at home, then retrofit the house so that you can both stay there for as long as possible. Don’t leave it up to her, as it may be overwhelming to hire a contractor etc. If you are going to move to a CCRC then move to the community so you can help her get settled and make friends. Widows who move to CCRC’s can struggle because they feel they are alone and find it more difficult to establish new relationships because their husband is no longer there to help.
Bottom line is, one of the best gifts you can leave your wife is a fully implemented plan.
5. Understand The Cost
This has two different components to it: financial and relational.
Financial – If you choose to stay at home or move to a 55 plus community, what happens if you run out of money and you still need care? If you have spent down your assets and meet the requirements for Medicaid, then they will help pay for your care. It also means that if you need skilled nursing care, you will be moved to a Medicaid facility. Normally, these are not as desirable as other options.
If you move to a CCRC, they may have a Benevolence Fund that could be used to help cover your expenses after you run out of money. You will still spend down your assets and qualify for Medicaid, but may be able to continue to live in the same community and receive care. I would encourage you to ask lots of questions on this to understand the terms of the community as each one is different, and this is not guaranteed (as the Benevolence Fund may not have enough to cover your expenses). However, having the option to not go to a Medicaid facility may be worth some consideration.
Relational – Some people prefer not to put the burden of care giving on their children. Rather they want to visit and spend quality time with their family, instead of having them tend to their medical needs when they visit.
Other people have children who relish the opportunity to care for their parents as they age, and have the skills and space to do so. Serving as a caregiver for a loved one can be a very draining and demanding job, and your family may not understand the impact it will have on their relationship with you and one another.
Working through the relational aspect purposefully with your family in advance (by discussing your plans with your children) to arrive at a decision that is best for everyone, can help relationships stay intact and be a continued blessing to both you and your family.
6. Consider All Options
As you are reading this, you may have a firm idea of what direction you want to go in. Before you move in any direction, I would encourage you to compare all your options. If you aren’t open to moving to a CCRC, visit one anyway to see what they are like. Talk with those who are older who have chosen to remain in their home to learn of their experience.
Sometimes our preconceived ideas limit our decision-making. Do your research and weigh each option, as you only get to decide this once, and it will have a big impact on your life.
There are no right or wrong options, but there are right and wrong options for you. This decision will impact your quality of life for years to come, so it shouldn’t be taken lightly, yet at the same time you need to develop a plan and start putting it in place.
I am a firm believer of having clients make this decision rather than their family or doctor. A well thought through and executed plan will help save your family and friends from having that responsibility placed upon them at a challenging time. I hope this helps you plan accordingly.
1. These decisions are not just about you, but about others in your life as well.
2. If you are overwhelmed or don’t know what to do, find a good Christian financial advisor to help you walk through the process.
3. Sincerely consider all your options and listen to your spouse.
4. Resources such as the Positive Aging Sourcebook can be helpful to learn about available options in the Mid-Atlantic region.