Housing choices in retirement: what are the options?
02/21/2020
We know that most people say they want to remain in their home when they retire and get older. But that isn’t true of everyone. Some want to move to a smaller house, a warmer climate or to be near children. Others prefer communities primarily geared to age 55+. And needs and goals may change over time. For some, housing in a group setting with supportive services may be the best solution due to health or other life situations.
Here are thumbnail sketches of housing options and care choices — what they are, the pros and cons of each and what to consider:
Remaining at home
Staying at home as long as possible is the preferred choice by most people over age 50, whether it is in the current house or a new one in another location. Aging in place has pros and cons. On one hand, it’s where people are most comfortable and familiar. On the other hand, the house may not be “age friendly” and suitable as time goes by.
What to Consider: As people age, driving a car and keeping up with home maintenance may become more difficult. If care is needed, there are home care agencies that provide services, but are expensive. Since they are not federally regulated, they need to be carefully vetted. (The hourly rate for a home health aide is $23 and a homemaker/companion is $22.50 per hour)1. Independent home care workers may be less costly but they are generally not bonded and may put a vulnerable older adult at risk of financial and physical abuse. Social isolation can be a cause of premature death, and the home can be a lonely and inconvenient place if a person can’t get out. Communities do provide low or no cost services such as transportation to medical appointments, adult day care and home delivered meals to help meet those needs.
55+ active adult communities
These communities are increasingly popular for a small but growing number of older adults. As the name implies, residents are generally healthy, looking for newer and often less expensive housing with low maintenance and attracted to a cohesive, social community. Many are built on golf courses with swimming pools, a clubhouse and a range of activities.
What to Consider: People who live in these communities own or rent their own homes or smaller units. While maintenance of the lawn and common areas is provided, owners are responsible for their own property. If care is needed, most of these communities do not have supportive services on the premises; they would have to be arranged independently and vetted as outlined above. Communities like these are self-contained, and are often far from town centers and other amenities, which may matter to some. While they provide activities and opportunities to make new friends of the same age, some people would rather be in communities with younger people.
Continuing Care Retirement Communities
These communities, known as CCRCs, provide a continuum of housing in one complex, starting with independent living. Residents can move seamlessly from their own home or apartment to assisted living and to a nursing home if health and care needs change. Those who choose a CCRC must move in when they are healthy, meet financial requirements and pass health and cognitive screening.
What to Consider: A CCRC guarantees care for life, and as a result requires a large payment of money upfront; the amount depends on whether the contract allows a portion of the money to be returned to the heirs upon death. The CCRC model attracts people who are planners, affluent, well-educated and want certainty about how they will live until the end of their lives. It prevents the difficulties of figuring out what to do if care is needed, but for most people it is a difficult decision when they do not have an immediate need. Because it is a life contract, it is important to check on the financial health and stability of the CCRC before moving. It is also worth exploring CCRCs at home, a new concept which under a similar fee structure, offers care services in a person’s home and guarantees the same continuum of care.
Assisted living
Assisted living facilities are designed for adults who may have health issues and need help with daily living activities such as dressing or bathing, but do not require the level of medical or nursing care provided in a nursing home. Growing numbers of these facilities have sections of the building set up for people with dementia.
What to Consider: Assisted living can be a good alternative to remaining at home for those with failing health or cognitive issues. It provides personal care needs in a safe and secure environment, with professionals on call if situations or emergencies arise. The activities that are offered and opportunities for socialization are a plus. However, assisted living can be costly. The average monthly base charge is $4,0511. Because it is a base rate, it’s important to look for added costs and extra charges that are not immediately apparent, such as additional hours of personal care, special dietary needs and medication management. One other thing to consider is that if care needs increase beyond what the facility can provide, a resident runs the risk of being discharged, leaving family members to scramble to find a suitable alternative.
Nursing homes
These facilities serve the frailest and chronically ill individuals who require a high level of nursing and personal care, and who are unable to care for themselves. Less than 5% of people over age 65 are in nursing homes, but the percentage is higher with each decade1. Younger people with severe injuries also reside in nursing homes.
What to Consider: Despite our wishes to remain at home or in assisted living, nursing homes may become a necessary alternative. The cost of care is high, with the average daily rate for a private room at $280 and a semi-private room at $2471. Because the residents are physically or mentally challenged and often are not able to advocate for themselves, making sure that the care provided is of good quality becomes even more important. Nursing homes are federally regulated and rated, and it is worthwhile to find out about them before a crisis occurs. Each state has a long-term care ombudsman program to register complaints. 70% of nursing home residents depend on Medicaid, so private insurance provides more control of choices1.
Shared housing and co-housing
There are a few newer housing models that remind us of the Golden Girls, which may have greater appeal to Boomers, who in theory have experienced communal living at college, camp or other places. Shared housing, where two or more people move into a home together, is one interesting alternative. Another is co-housing, specially built small communities where each person or couple has their own unit but share dining rooms and living areas.
What to Consider: The concept behind shared housing and co-housing is a good one. Friends or like-minded people can pool their resources, live less expensively, and enjoy friendship. If emergencies arise or their care needs increase, they are there to help each other and provide support. The downside is the difficulty of living in small spaces together, financial disparities and eventually taking care of a housemate at a level not anticipated at the outset. It has been suggested that before moving into a shared housing arrangement that a contract be drawn up, finances are reviewed and provisions are made for paid long-term care and other services if the need arises.
In summary
Clients who prepare for their long-term care needs may not think about where they will live as they grow older and need assistance. However, knowing more about the options available and costs involved can be a helpful guide, not only as they make their own plans, but also as they become caregivers for aging parents and are faced with making difficult housing decisions on their behalf.
1 Genworth Cost of Care Survey 2019. https://www.multivu.com/players/English/8625551-8625551-genworth-cost-of-care-survey-2019/image/2019CostofCareChart_1571070745075-HR.jpg
2 Long-term care riders generally have an additional cost to them and have restrictions and limitations. Be sure to review the product specifications for details.
Life insurance products are issued by Equitable Life Insurance Company (NY, NY) or Equitable Financial Life Insurance Company of America (EFLOA), an Arizona stock corporation with its main administration office in Jersey City, NJ 07310 and are co-distributed by affiliates Equitable Network, LLC (Equitable Network Insurance Agency of California in CA; Equitable Network Insurance Agency of Utah in UT; Equitable Network of Puerto Rico, Inc. in PR), and Equitable Distributors, LLC. Variable products are co-distributed by Equitable Advisors, LLC (Member FINRA, SIPC) (Equitable Financial Advisors in MI and TN) and Equitable Distributors, LLC. When sold by New York based (i.e. domiciled) financial professionals life insurance is issued by Equitable Financial Life Insurance Company (NY, NY).
Equitable and its affiliates are not affiliated with Dr. Sandra Timmermann.
