How CCRCs Keep You from Changing Addresses and Burning Through Your Savings as You Age
For decades you’ve worked to save money for an active, fun-filled retirement lifestyle. As you search for the ideal home base from which to enjoy your newfound freedom, you may also have the nagging concern that plagues many retirees — what if I run out of money? Unfortunately, the possibility of running through your retirement savings does exist, but there is one solution that can help protect your financial resources while providing the carefree lifestyle you’ve envisioned for your retirement years: a retirement community that offers a Life Care contract.
Retirement Savings vs. Life’s What-Ifs
Of course, you’re not naïve about the curveballs life can throw your way, or the devastating effect unexpected expenses can have on your retirement nest egg. In a recent survey, approximately two-thirds of retirees cited the fear of running out of money as a reason they limit spending.
But looking squarely at the potential pitfalls you may face in retirement can be a first step toward a possible solution. Here are a few situations that can impact your retirement savings:
- A health setback. The cost of medical care has risen 110.1% since 2000, a rate that’s well above average inflation. Even with Medicare covering some medical costs, experts estimate that the average couple retiring this year will spend about $300,000 on health care over the course of their retirement.
- Outliving your savings. Not many of us would complain about the increase in life expectancy that sees the average 65-year-old living another 19 to 20 years. But a longer lifespan can put a strain on retirement funds. A report from The World Economic Forum suggests most retirees in the U.S. will outlive their savings by 8 to 10 years.
- Needing long-term care. According to the U.S. Department of Health & Human Services, a person who’s 65 years old today has a 70% chance of eventually needing some type of long-term care service, such as assisted living, memory care or skilled nursing. Women need care for an estimated 3.7 years and men for 2.2 years. With the cost of long-term care increasing faster than the rate of inflation, getting the support you need can take a toll on your retirement savings. In 2022, the national median cost for a home health aide, working up to 44 hours a week, was $5,302 per month; assisted living was $4,635 per month; a private room in skilled nursing was $9,305 per month.
- An unforeseen change of address. If a health crisis requires a sudden move to a community that offers long-term care, the need for haste can lead to unexpected costs. Depending on your circumstances and the housing market, there may be delays in the sale of your home or financial penalties to breaking your lease, forcing you to dip into savings to cover expenses.
CCRCs Offer Reassurance
If you’re looking for an independent lifestyle and peace of mind about life’s what-ifs, you can find both in a continuing care retirement community (CCRC) that offers a Life Care contract. Here’s how it works:
In a CCRC, sometimes called a Life Plan Community, residents enjoy a flourishing lifestyle, an abundance of amenities and services, and the assurance that their needs will be met if their health changes. An on-site continuum of care — which may include Assisted Living, Memory Care, Skilled Nursing and Rehabilitation — ensures Independent Living residents won’t have to make a disruptive move to a different community during a health crisis. Instead, you can stay in the community you call home, within a network of supportive friends and neighbors.
The cost of a CCRC typically includes:
- A one-time entrance fee. This fee secures your Independent Living residence and gives you priority access to the continuum of care, prepaying some of the cost of long-term care you may someday need.
- Monthly service fees. This recurring fee covers home maintenance, property taxes, a meal plan, fitness membership, a beautifully maintained campus, access to on-site long-term care, and an abundance of amenities and services.
The Life Care Advantage
If the CCRC offers a Life Care financial contract, you’ll discover additional benefits that help protect your retirement resources:
- Care for life at predictable prices. While the details may vary, typically Life Care offers residents the assurance that if they ever need long-term care, they can access these services for about the same monthly service fee they pay for Independent Living. There are no surprises — you know where you’ll receive care and how much you’ll pay.
- Protection from rising healthcare costs. By securing a predictable fee for higher levels of care, the cost can be considerably lower than the market rate, which may lead to significant savings.
- Partial refundability. Some Life Care contracts make a percentage of the entrance fee refundable upon leaving the community, protecting assets for your heirs.
- Affordability for homeowners. The profits from the sale of your home will likely cover the entrance fee.
- Potential tax advantages. Depending on your circumstances, a portion of the entrance fee may be tax-deductible. Consider talking with your tax advisor to learn more.
- Benevolent assistance. In some CCRCs, residents who outlive their resources can apply for benevolent assistance, which entitles them to continued residency and access to on-site health care if their funds run short.
Make the Move to Lakewood
At Lakewood, you’ll discover everything you’re looking for in a satisfying retirement lifestyle. With one move, you’ll find yourself ensconced in a friendly culture on a beautiful campus with the exceptional services and amenities that elevate an independent lifestyle. And you’ll discover the peace of mind provided by a Life Care contract and continuum of care. Contact us to learn more about our active senior living community or schedule a visit and experience the possibilities of a premier CCRC offering Life Care.