Although there are many financial items to consider when moving to a Continuing Care Retirement Community (CCRC), make the following among your top financial considerations:
1. Can I afford the lifetime costs?
CCRCs provide a broad range of services and opportunities for comfortable and enjoyable lifestyle living. It is important to remember that they are businesses and providing such amenities come with a price. Make certain that you have the assets for entry and continuing care lifetime costs.
2. What expenses can I anticipate occurring?
Check to make certain that you completely understand the initial and lifetime costs of the community you’re considering. Ask about past pricing increases and anticipated future cost increases. Remember that in addition to the monthly costs of CCRC amenities, you’ll have your own lifestyle and continuing care costs. Determine what your total monthly income need will be and the sources that will provide that income.
3. What’s my “three-legged stool” for income?
Usually, Social Security, pensions, and personal accumulations are the three sources that historically have provided the foundation for retirement income. Questions continue to be raised about the viability of Social Security, and its future is a “political hot potato.” The same could be said for companies that provide pensions. Many retirement plans are under-funded. When the economy becomes constricted, retirement plans may be raided or not funded. Keep an eye on yours, if you’re lucky enough to have one. That brings us to personal accumulations. Make certain they’re managed in accordance with your risk tolerance. As we age, often “safer is better.” But perhaps not so safe that inflation and taxation take their toll on your income!
4. Are all of my healthcare expenses taken care of?
Part of the CCRC plan often includes a lifetime continuing care package. However, not all healthcare costs are taken care of with those plans. Generally, personal physician costs, prescription medication costs, hospital costs, and other such costs not covered by the CCRC plan are the resident’s responsibility. Studies have indicated that a couple, age 65, will need approximately $250,000 in assets allocated to take care of lifetime healthcare costs not covered by medical insurance. Make certain that you have quality medical insurance and ancillary funds to cover costs not provided for in your medical plan.
5. Do I need long-term care insurance in a Continuing Care Retirement Community?
If you have a long-term care insurance policy, you may not need the coverage, depending upon the CCRC plan you choose. However, retaining the plan can help to reimburse some of the CCRC costs you incur. Most CCRCs will give you a monthly cost break-down that can be sent to your long-term care insurance provider for reimbursement. Some folks may not want to continue the premium expenditure for the long-term care insurance policy because they fear it may never be used and such expenditures would be lost. There are life insurance policies with long-term care riders that provide similar benefits. With those policies, someone will reap the benefits, and it will either be you for long-term care services or your heir as beneficiary.
There are many financial needs that need to be taken into consideration when planning for retirement and continuing care needs. However, by researching your options in advance and planning for your individuals needs you can be well prepared for your retirement future.
About the Author
E. Wayne Bullis, Ed.D., CRFA is a Certified Retirement Financial Advisor and President of River City Wealth Consultants, Inc. For information or for answers to your additional questions, please contact him at his office located at 8100 Three Chopt Road, Suite 209, Richmond, VA 23229, via telephone 804-285-7246 or by e-mail at wayne@RCWConslutants.net.