In my years working in senior care, I’ve had the pleasure of working in both entry-fee and rental senior living communities. People often ask me, “Which is better?” All I can tell you is what I would choose for my family members: a rental community. Why? Because you can protect your nest egg against high entry-fees.
The purpose of moving to a retirement community is to choose where you are going to spend the rest of your retirement years. No one wants to think about moving to multiple communities during retirement, right? When you move into a buy-in community, you have just locked that community in as your place to live for the rest of your retirement years. Why? Because you just invested a large portion of your life savings into an entrance fee. (Entrance fee amounts are set based upon the average sales price of a home in the area.)
“The entrance fee is refundable if I leave the community,” people say. I’d encourage you to read that fine print again and again. What is the exact process for receiving a refund of your fee if you make a decision to move out? Is your refund triggered by the next sale of an apartment? Is that any apartment, an apartment of your same style, or is it your exact apartment? Ask what the waiting list is to receive refunds right now. I’ve seen families wait as long as five years for the refund of their parents’ entrance fees!
“I don’t expect to ever move from the community,” people say. Of course you don’t or you wouldn’t move there! Situations change, however. Communities get purchased by other companies or a new management company is selected to run the community. Policies change, budgets change…and you may find yourself in a situation where you are stuck because you invested all your money into a life-long commitment at an entry-fee retirement community.
“They have to take care of me forever, even if I run out of money.” If it sounds too good to be true, it probably is. Read that fine print on this one again, too. Most contracts will state that the community will use your entrance fee to pay for your care before they will allow you to stay for “free.” Your kids’ inheritance isn’t as secure as you thought. And that “free” room is just room and board; it doesn’t include incidentals, medications, or supplies and may not even provide a private room!
There’s more to the “have to take care of me” story, too. In the fine print, there will be a list of reasons why the community can ask you to leave. One undoubtedly feels these reasons will never apply to them, such as being a “danger to others.” However, we never know what our future health needs will be. What if you or your spouse develop Alzheimer’s with personality changes that cause aggression? You may need to leave the community–and your huge entrance fee behind while you wait for your refund.
“My rate stays the same no matter what level of care.” Not really. Again, read the contract carefully. If you need a higher level of care, your base rate may stay the same, but that is only for room and board. You will still need to pay for supplies, medications, and incidentals…and sometimes even the extra meal that is provided to residents in higher levels of care that is not provided for independent living. This can end up being thousands of dollars per month.
If you think all this is hard to follow, it is. And none of this is by accident. While you will most likely receive a refund of your entry-free eventually, in the meantime, you have loaned your money to the community and they have been earning interest on it!
This is why I appreciate the simplicity of a rental community as your retirement choice. No tricks, no games, and easy-to-understand residency agreements.
At St. Anthony’s Senior Living, we provide all the same amenities as the entry-free communities, but you get to keep your nest egg in your account and do with it what you see fit!
