myLifeSite Blog Archives

When I speak to groups about these increasingly popular, but often complex, retirement living arrangements one of the questions I am most often asked is whether families should avoid for-profit (FP) retirement communities and seek only not-for-profit (NFP) communities. The question is almost always prompted by the idea that NFP communities “won’t kick you out” if you run out of money. This message tends to resonate among consumers for obvious reasons. Yet, it should not be taken as a blanket statement and it should not necessarily cause you to exclude all FP communities from your search.

In summary, a strong relationship between a marketing director and an objective financial advisor can create a win-win scenario. The marketing director is awarded with a shortened sales cycle while the FA opens up a new client opportunity.

Well, despite everything I have just described there are there are actually some ways that CCRCs and financial advisors can work together to create a long-term, win-win situation.

Since the Great Recession and the U.S. Senate’s subsequent study and hearings on continuing care retirement communities (CCRCs), financial regulation and contract terms have become a hot-button issues among prospective CCRC residents and regulatory bodies. Here are a few important details to understand about regulation of CCRCs.

As described by Gerace, “…some expect rental continuing care retirement communities (CCRCs) to gain market share in the next few years while others contend the diversity of the baby boomer generation will support the near-term viability for the entry fee model as well.”

More information on deducting retirement community entry fees

Planning ahead for the later stages of retirement involves significantly more than this issue of cost alone. While LTCi will provide dollars to cover some or all of the cost of long-term care major headaches may still lie ahead for your clients and their families if they do not understand the implications of various retirement living choices and which one is most appropriate for them.

Yet, there was one other aspect I wanted to consider and I was curious to see how it might impact my results. I wanted to see if owning or purchasing life insurance would impact the results. With rare exception I found that if the resident(s) already owns life insurance it really does not impact the results because, whether the residents choose the refundable contract or the standard contract, the life insurance proceeds simply add dollars to the end results.

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Today, I want to summarize some comparative scenarios that I ran on our proprietary software system called DecisionGenie to help you gain an idea of when it might make the most sense to choose a refundable entry fee contract. Of course, these projections are purely hypothetical and there is no way I could run every type of scenario that a prospective resident could potentially encounter. Therefore, this analysis is only meant to give you some general direction in your planning. Ultimately you should consider working with a financial planning professional who can help you analyze your unique situation.

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877-699-2272

Many entry fee retirement communities will offer residents the choice of a refundable entry fee as an alternative to their standard, non-refundable contract. The trade-off: a refundable entry fee will generally be higher than the entry fee for the same residential unit under the standard contract.

Prospective residents of continuing care retirement communities offering such a refund often face a dilemma: pay the higher entry fee but have the peace of mind of knowing that some- or all- of the entry fee will be refunded if the resident moves out of the community, or at death. (In the case of the latter the refund would go to the heirs.) Alternatively, the resident could choose to save money up-front while knowing that no portion of the entry fee will be refunded.

www.lifesitelogics.com

info@lifesitelogics.com

877-699-2272