Continuing Care Retirement Communities, What You Need To Know By Martha Batista, CEO ![]() When it comes to long term care and senior living, we are so extremely lucky to be living in an area of the country that offers so many different options. Chances are that you will be able to find exactly what you need and want here in the Valley of the Sun. However, with the many options to choose from, also come confusion and often frustration. To make the right decision, it is important to educate yourself on what each option offers and the financial commitments attached to them. One question that comes up frequently is whether a buy-in option makes sense. And the answer is…it depends. First, let’s make sure we all understand what a buy-in is and is not. In broad terms, there are two types of communities – those that offer a rental model, and those that require a buy-in. The rental model is easy to understand. You pay a monthly fee that includes your apartment rent and your care services. You will pay a relative small, one time only, community fee at the time of move in, ranging from $2000 to $4000. Your monthly fee will most likely increase every year by 2% to 3%, depending on the community. As your level of care increases (i.e. if you move from independent to assisted living, or from assisted living to memory care, or just need additional services), your care costs will increase, sometimes significantly. This is the big unknown for most people and the major challenge in preparing a financial plan for the future. A buy-in community takes away this challenge, but at a cost. A buy-in community is also known as a CCRC – Continuum of Care Retirement Community. And there are different types as well, but let’s keep it simple for now. A CCRC offers different levels of care on the same campus, starting with independent living, assisted living, memory care and skilled nursing and rehab. The most attractive attribute of a CCRC is that your monthly fee will not change as your level of care changes. The only increase you will see is the usual 2% to 3% on an annual basis. This makes planning much easier to do. However, this “peace of mind” will require a substantial amount of money upfront, ranging from $70K to over $600K, depending on the community and size of apartment you choose. The term “buy-in” is a misnomer because you are not really buying an asset like you would buy a house. What you are buying, in a sense, is an insurance that your cost will be stable no matter the level of care that you will need in the future. So the question is: how do you decide which type of community is right for you? For some, the answer to this question is very easy – they simply do not have the financial means to afford a buy-in. For others, is not as simple, and the answer depends on many factors:
Client Example of an Economic Break Even Analysis ![]() Every situation is different and it would be foolish to prescribe an algorithm by which seniors and their families can quickly determine what is the best option for them. We believe that educating yourself in all aspects of what is available and becoming a smart consumer is the best course of action, whether you do it by yourself or speak with your professional Senior Living Advisor. |
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