During my financial planning days I used to speak to groups of older adults on a fairly regular basis. With approximately fourteen lifeplan communities (aka continuing care retirement communities or “CCRCs”) within about a 30 mile radius of my office I frequently received questions about these communities. In some cases, those I spoke with were trying to compare two or three different communities. The questions I received typically focused on types of contracts and payment plans, financial stability, non-profits versus for profits, and, of course, affordability. It is this last one that I want to focus on in this post. Calculating the affordability of a CCRC is an important part of the decision process, but it’s not always an easy thing for someone to do on their own.
Statistics show that residents of CCRCs are, on average, more affluent than the general 65+ population. My experience in talking with prospective residents is that, from a financial perspective, the question is not so much about “can I afford it” as much as it is “to what extent can I afford it?” Many who are considering moving to a Continuing Care Retirement Community want a better understanding of what the financial impact to their estate could be based on a range of possible scenarios. For instance, “what if I live in the community for twenty years and require five years of care.” Or, “what if I live only fifteen years but require ten years of care?” They want to know how much will be left over for the kids in these scenarios after paying an entry fee, monthly fees, and the cost of care?
Affordability of a CCRC: Let’s Run the Numbers
For many who ask these questions, or, in some cases, their adult children, it is hard to find answers. Some will try to “run the numbers” at home using an excel spreadsheet in order to estimate the affordability of a CCRC, but it is nearly impossible to account for all the moving parts, such as entry fees, refundable entry fees, fee adjustments that might take place within the community (which will vary depending on the type of resident contract and get even more complicated for couples), the impact of long term care insurance, inflation, growth on investments, etc.
The other option is to consult with a financial advisor, but the problem with this approach is that most advisors don’t have an in-depth knowledge of CCRCs; therefore, projections are not accurate because data is either left out or entered incorrectly. Furthermore, the software they have available is typically designed for financial and investment planning; also not accounting for the nuances described above.
Surely there must be a better way for prospective residents and their families to gain a more clear understanding of the potential financial impact of moving to a CCRC. I’m pleased to say that now there is!
Created by myLifeSite, our Financial Calculator is available for inclusion on CCRCs’ website as a resource for those considering their continuing care retirement community or lifecare community. Within a matter of minutes, the Financial Calculator will generate an easy-to-understand report revealing total savings and investments at the end of each year after accounting for the various inputs related to pricing, cost of care, type of contract, etc. The results are obviously hypothetical and based on a number of assumptions (as is the case with any financial software that projects future results), but the nice thing is that you can quickly change inputs and then re-calculate to see a range of scenarios, thus providing a general sense of what might be expected.
To learn more about adding myLifeSite’s Financial Calculator to your CCRC’s website, contact us today for a demo.
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