Published by Christina Hester Snyder, Partner and Wealth Advisor
Reaching retirement is a huge achievement. You’ve worked your whole life for this! It’s time to make sure your hard work pays off and you’re able to enjoy the fruits of your labor. Whether you’re fully independent, or in need of some assistance with daily living, choosing the right retirement community should be filled with excitement and hope.
But all too often it can be confusing and stressful, especially if you aren’t aware of all your options or which one makes the most sense for you. In this guide, we’ll explore the two most common senior living options: rental continuing care retirement communities (CCRC) and lifecare CCRCs.
A rental CCRC is a type of retirement community that is based on a monthly rental model, similar to that of a condo or apartment. To join a rental CCRC, you would be required to sign a lease and pay a monthly fee based on the specific services you desire.
These communities offer more a la carte options, where you can pick and choose the amenities and level of care needed. Some services will be included in the monthly payment, while others will be add-ons. Traditional amenities include housekeeping, meals, maintenance, transportation, and on-site activities available for residents.
Rental CCRCs are a broad category of senior living, so it’s always important to thoroughly review the rental agreement before deciding on a community. Many rental CCRCs offer independent living only, which may make this type of community a poor choice for individuals looking for assisted living or skilled nursing care, or those who expect to need this type of care in the future.
The care they do offer is usually contracted through third-party home health services as opposed to on-site facilities. This means that an individual may enter a rental CCRC with no need for assisted care, but as their needs change over time, they may need to move to a more comprehensive facility.
- Lower upfront cost
- A la carte services mean you only pay for what you need.
- Higher levels of senior care may not be available.
- If you can no longer afford the monthly payment, you will have to move out.
Life Care CCRC
Like rental CCRCs, life care CCRCs also involve a monthly fee. Unlike the rental communities, however, residents are also required to pay an upfront entrance fee in order to join a life care CCRC.
The entrance fee, also called a “buy-in,” is like a down payment for future services; it will cover the cost of care you may need in the future and it locks in the rate of that care based on the date you sign up.
Though it may seem more expensive due to the upfront cost, life care CCRCs could actually save you money if you require long-term care down the line.
Additionally, many life care CCRCs offer two financial contingencies to protect your entrance fee if you do not get your money’s worth. First, the entrance fee is usually at least partially refundable to either you or your estate. Second, many life care contracts offer a benevolence clause which allows residents to continue living in the community even if they outlive their financial resources. Essentially, the larger upfront payment secures your right to live and receive care for as long as you need it.
Life care CCRCs offer the same traditional amenities as rental communities (dining, housekeeping, maintenance, resident activities, etc.), but with the added benefit of guaranteed care.
- Higher levels of senior care are available.
- Rates for care are locked in when you sign the contract, which could save you money over time.
- Entrance fee may be partially or fully refundable.
- Benevolence clause means you won’t be forced to move if you can no longer afford care.
- Higher upfront cost
- May end up overpaying if you don’t need long-term care
Making the Right Decision
Choosing the right form of senior living is a decision not to be taken lightly. It depends on a number of factors that must be considered as a whole. At Jacob William Advisory, we have experience helping clients assess their retirement needs and navigate this decision. To learn more about how we can help, contact our office by calling 410-821-6724 or emailing [email protected] or schedule an appointment at https://www.jacobwilliam.com/insights/#contact.
About Christina Hester Snyder
Christina is a Partner and Wealth Advisor at Jacob William Advisory with a storied 20-plus year career in financial services. Christina is known for her commitment to her clients and is dedicated to helping them alleviate their financial fears through education and planning that goes far beyond investments. She believes in a comprehensive approach that addresses all facets of planning, including wealth transfer, insurance, taxes, investments, estate and trust planning, retirement, risk management, and business planning. Christina graduated from the University of Baltimore with a Bachelor of Science in Business with an emphasis in international business. She also holds many professional designations, including CERTIFIED FINANCIAL PLANNER™, Chartered Financial Consultant® (ChFC®), Retirement Income Certified Professional® (RIPC®), and Certified IRA Services Professional (CISP). She is an active member of her community and is involved in many professional and nonprofit groups, including acting as the president of the Maryland chapter of Women in Insurance & Financial Services and serving on the board of a nonprofit that helps Maryland families with financial hardships. To learn more about Christina, please click here.