How to Pick Your Retirement Home When There Are More Choices Than Ever May 31, 2019 at 4:06 p.m. ET By Reshma Kapadia
https://www.marketwatch.com/articles/finding-your-retirement-home-51559332736?mod=mw_theo_homepage
Meg and Jon Warden found their retirement dream home on a secluded lot in Eau Claire, Wis., close to the Chippewa River and surrounded by woods, a welcome change from the Colorado desert they had left behind.
Two years later, they were rethinking their move: While the Wisconsin winters were harsh, the loneliness and boredom were worse.
Caution is warranted when evaluating new developments. Many communities try to presell about 60% of the units before breaking ground. West of Signature Estate & Investment Advisors recommends sticking with developments from those that have other strong retirement communities. For context: Communities a decade or older with occupancy rates of 80% or lower should be a source of concern, while the most established communities tend to have occupancy rates of 95% and long waiting lists.
To check the facility’s financial wherewithal, West checks cash on hand, with strong communities typically having a year’s worth of expenses covered.
Among the most common calls that elder-care lawyers field are when someone is evicted from a facility because his or her medical needs or behavior can’t be managed—a reason that Michael Amoruso, a recent president of the National Academy of Elder Law Attorneys, tells clients to understand what the threshold is for discharge, even if the person currently has no conditions.
It is good to be realistic. If someone has early stages of dementia, Amoruso says to make sure the facility has a memory-care wing or floor to avoid an eviction when that person wanders out. Facilities should also have a clear protocol on how they handle medical emergencies, like calling soon after someone is put in an ambulance—not weeks later, he adds.
While weather may be an afterthought, it shouldn’t be, especially as retirees continue to flock to the Sun Belt, where heat waves and storms are increasingly common.
“Older adults and natural disasters and heat don’t mix, so anytime you have a situation where they are exposed to one of these, people die,” says David Dosa, a geriatrician and associate professor at Brown University’s School of Public Health.
While most facilities now have generators and disaster plans, experts on aging recommend checking to see how they fared in past storms and asking about their evacuation protocol, as well as what they do to coax reluctant residents to leave their rooms, for example, for cooling centers that may be set up.
For the Wardens, co-housing doesn’t completely address the long-term care question. The community had planned to reserve a home for caregiving needs, but has since rented it out, as no one has needed it.
“The community is happy to step in for pet care or rides, but to ask neighbors for potentially intimate help over an extended period of time—that feels uncomfortable,” Jon Warden says, adding that a 104-year-old resident recently went to a nursing home.
Just a fraction of seniors end up living in nursing homes—about 3%—as of the 2010 Census, with many just there for a brief stay; the clear preference is home-based care. And even the initial interim care provided by a community can help reduce total caregiving costs, says Danielle Arigoni, director of AARP’s Livable Communities team.
Maybe Airbnb gets the credit, but seniors are more receptive to home-sharing. Only 29% of older adults said they were not willing to share their homes in 2018, down from 59% in 2014. It may gain even more fans as single baby boomers begin to retire. Some cities recognize the possible demand and are looking at lifting restrictions that have prohibited roommate situations. That could help people repurpose the McMansions that are getting harder to sell to the latest crop of millennial home buyers, Arigoni says. Tech start-ups like Nesterly and Silvernest are seeking to facilitate home-sharing arrangements among older adults.
Another way that some people are trying to tackle the caregiving conundrum is by adding accessory dwelling units, typically 600 to 800 square feet that are akin to carriage or guest houses. Cities and states like Lexington, Ky., and Oregon are removing barriers to such structures.
And 84% of those 50 or older surveyed by AARP said they were willing to create such a dwelling unit to care for a loved one, and 60% were willing to build one to house a caregiver—helping children care for aging parents and also offering a way to attract caregivers in places where public transportation may be limited. The extra perk: It can be rented out and generate income when care isn’t needed.
As baby boomers age, senior housing may go from being something to avoid at all costs to the place to be. When it comes to shopping for a place, retirees may want to take a lesson from their past when they sought a home to raise their families: Find a place that can grow with you for decades to come.
Meg and Jon Warden found their retirement dream home on a secluded lot in Eau Claire, Wis., close to the Chippewa River and surrounded by woods, a welcome change from the Colorado desert they had left behind.
Two years later, they were rethinking their move: While the Wisconsin winters were harsh, the loneliness and boredom were worse.
“I saved for retirement but didn’t have a plan of what that would look like,” says Jon Warden, 67, a former software engineer. “I didn’t appreciate how much I lost socially by retiring.”
When it comes to retirement,expectations and realityare often mismatched—andhousingis no exception.
Yet trying to make an appropriate match is getting more complicated. Baby boomers like the Wardens are rethinking what senior housing means to them, and that, plus more-organic grass-roots efforts, is pushing the industry to create more options.
Meg Warden, 66, had fond memories of a brief stint on a commune in the 1970s, and that encouraged the couple to look at Elderberry Cohousing, about half an hour from Durham, N.C. The Wardens now own one of its 18 town houses and a stake in its 10-acre property. They spend their days exploring the trails in the nearby woods, enjoying potluck meals in the common house, and tending organic gardens with other residents—a common purpose that feeds the sense of community they craved.
“The previous view of retirement housing was all about safety, security, and comfort—a place [where] you filled your bucket list and then died,” says Robert Kramer, founder of the nonprofit National Investment Center for Seniors Housing & Care, or NIC. “Boomersand the younger part of the Silent Generation are much more into wellness and well-being, and things that can keep them engaged. They don’t want to be isolated in a 24-hour age-segregated ghetto. They want a community where they can refire passions rather than retire.”
As a result, developers are brainstorming in preparation for the nearly 2.5 million seniors expected to move out of their homes each year starting in 2035. Already, developers are coming out with new takes on senior living.
The newer versions check more boxes for what aging experts think retirees will want in a retirement home, but some still leave big gaps for what they may eventually need. Finding the right fit means doing a hefty dose of due diligence in an industry with patchy regulation in some areas and little oversight in others.
How to make sense of a dizzying array of options? We consulted aging-policy experts, elder-care lawyers, senior-housing veterans, and financial planners to find out how to evaluate them.
Making realistic assumptions is an important first step. Surveys show that the majority of adults 50 and older want to grow old in their current homes, but the U.S. housing stock is not equipped for them. Some 43% of those 80 and older have mobility problems,according to a 2018 reportfrom Harvard University’s Joint Center for Housing Studies, but less than 4% of homes are accessible.
That means the vast majority of homes have multiple floors and steps, and lack the extrawide hallways and doors needed to accommodate a wheelchair, walker, or anything that helps people get around.
Even people who move into accessible homes often end up moving again because of social isolation or little access to activities, or because they need assistance with daily activities like getting dressed. And those moves tend to come when someone is ill, frail, or grieving.
“Consumers’ expectation of housing and health care is completely unrealistic,” says Thomas West, partner at Signature Estate & Investment Advisors. “There’s a Peter Pan assumption: Since they don’t have a cognitive or mobility issue, they can’t imagine it happening. I try to coach clients to think about the implications of two moves—with the second usually happening in reaction to something—and thinking about what happens to the surviving spouse. That can get people to become more active shoppers.”
And shoppers certainly have plenty to choose from, as the new iterations of senior housing run the gamut. Condos equipped with aging-friendly counters and wheelchair-friendly doorways are popping up near major metro areas in mixed-use condo buildings, adjacent to bike trails and within walking distance of restaurants, entertainment, and transportation. Assisted-living and continuing-care retirement communities offer independent living, but also assisted living, memory care, and nursing homes on campus. They can boast executive chefs, concierge services, and amenities on par with four-star resorts.
Some communities are linked with universities to let retirees go back to school, while others are set up as mini art colonies. Grass-roots senior options are also emerging, from communal communities like Elderberry to multigenerational communities, where seniors volunteer and act as a support network for foster children and their adoptive parents.
“The industry is evolving so much faster than conventional wisdom,” West says, adding that the nursing homes no one wanted to send families to a decade ago are far from the only choice these days.
The result is a dizzying array of options. “Who do you go to in order to understand this stuff?” he asks. “Your financial planner? Accountant? Lawyer? No one is paid to know it.”
The new options don’t solve all retirees’ housing issues. Though many newer senior-housing communities are tackling the issues of loneliness and proximity to activities, many are not confronting the huge risk that looms over retirees: long-term care.
“Some of this housing will be for people 65 to 85, but won’t be for 85- to 110-year-olds,” Kramer of NIC says. “What happens when they lose their mobility, or [have]cognitive issues?”
For-profit independent-living facilities charge an average rent of about $3,050 a month; assisted living costs an average of $4,577, and memory care is $6,301, according to estimates from NIC. But that is before incorporating the à la carte costs for the help that many people hire to augment what is offered in an assisted-care facility, for example. Those costs can spiral.
But managing the care and finding the caregivers is a problem even for people who can afford the cost, and many cannot: About half of middle-income seniors are not expected to have the financial wherewithal to pay for senior housing, even after selling their existing home, according to a recent report by NIC.
And it could get even harder. Families tend to provide the bulk of caregiving. But the ratio of prospective family caregivers to those who may need care is expected to decline to 4 to 1 by 2030—when many boomers enter their 80s, the age that caregiving needs begin to arise—from 7 to 1 in 2010,according to AARP. As a result, caregivers, who are already hard to hire, could become even scarcer and costlier.
Here are some other things to consider:
Continuing care retirement communities, or CCRCs, have challenged that view and attract healthier retirees, like Virgil and Janice Hoftiezer. The Indiana couple, now both 77, had known that their two-story home wouldn’t be suitable as they aged. They had pondered building a new house. But on their frequent trips early in retirement, the couple kept hearing people rave about CCRCs. One big draw was that their long-term care needs would be covered.
“I used to jokingly say that I didn’t want my son-in-law to choose a nursing home for me,” says Virgil, a retired professor at Indiana University School of Medicine. “This was a gift we gave our children.”
The couple settled on Kendal at Granville in Ohio because of its integration with Denison University, with the CCRC bringing in professors to share their latest research and student artists in residence, while retirees can take a bus to the campus for classes and performances.
CCRC contracts come in two basic varieties: A rent-based, pay-as-you-go model, and a setup that charges an upfront entrance fee, averaging $330,000 at for-profit facilities and going up to $2 million for higher-end properties, along with a monthly maintenance fee.
Within this group, there are also different contract types. The full-life-care plan tends to cost more upfront, but prepays future long-term care costs the person may end up needing.
Some nonprofit CCRCs have a benevolent fund, partly funded with the entrance fees, that will continue to pay for a resident’s care even if she or he has run out of money to pay monthly maintenance fees. (That’s one reason CCRCs scrutinize finances to gauge who they will let in.) Others charge a lower upfront fee in return for residents paying for any needed long-term care at market rates. In many of these contracts, 90% of the entrance fee can be refunded if someone leaves or dies, but the fee increase can be steep—doubling or tripling when someone goes from independent living to memory care or skilled nursing.
One tip: All fees, including the entrance fee, often can be negotiated, especially at facilities without waiting lists and in markets where developers have gotten ahead of demand.
Retirees may be able to deduct a portion of the entrance fee and monthly fee as medical expenses—the amount above 10% of their adjusted gross income. The exact amount depends on the facility’s total medical expense as a share of its total operating expenses, typically 7% to 30%, says Pamela Thompson, a managing director at Mariner Wealth Advisors in Louisville, Ky. If they do this, it could be a good year to potentially do a Roth IRA conversion, since their taxable income may be lower.
Andrew Carle, a former industry executive who consults with J.D. Power on senior housing, recommends that people check credentials. Top administrators should have a master’s degree and five years of experience or seven years of experience and a bachelor’s degree. At least three-quarters of the nurses aides should be certified. Review licensing records for three years to see if facilities have been fined, had licenses suspended, or had staff issues.When it comes to retirement,expectations and realityare often mismatched—andhousingis no exception.
Yet trying to make an appropriate match is getting more complicated. Baby boomers like the Wardens are rethinking what senior housing means to them, and that, plus more-organic grass-roots efforts, is pushing the industry to create more options.
Meg Warden, 66, had fond memories of a brief stint on a commune in the 1970s, and that encouraged the couple to look at Elderberry Cohousing, about half an hour from Durham, N.C. The Wardens now own one of its 18 town houses and a stake in its 10-acre property. They spend their days exploring the trails in the nearby woods, enjoying potluck meals in the common house, and tending organic gardens with other residents—a common purpose that feeds the sense of community they craved.
“The previous view of retirement housing was all about safety, security, and comfort—a place [where] you filled your bucket list and then died,” says Robert Kramer, founder of the nonprofit National Investment Center for Seniors Housing & Care, or NIC. “Boomersand the younger part of the Silent Generation are much more into wellness and well-being, and things that can keep them engaged. They don’t want to be isolated in a 24-hour age-segregated ghetto. They want a community where they can refire passions rather than retire.”
As a result, developers are brainstorming in preparation for the nearly 2.5 million seniors expected to move out of their homes each year starting in 2035. Already, developers are coming out with new takes on senior living.
The newer versions check more boxes for what aging experts think retirees will want in a retirement home, but some still leave big gaps for what they may eventually need. Finding the right fit means doing a hefty dose of due diligence in an industry with patchy regulation in some areas and little oversight in others.
How to make sense of a dizzying array of options? We consulted aging-policy experts, elder-care lawyers, senior-housing veterans, and financial planners to find out how to evaluate them.
Making realistic assumptions is an important first step. Surveys show that the majority of adults 50 and older want to grow old in their current homes, but the U.S. housing stock is not equipped for them. Some 43% of those 80 and older have mobility problems,according to a 2018 reportfrom Harvard University’s Joint Center for Housing Studies, but less than 4% of homes are accessible.
That means the vast majority of homes have multiple floors and steps, and lack the extrawide hallways and doors needed to accommodate a wheelchair, walker, or anything that helps people get around.
Even people who move into accessible homes often end up moving again because of social isolation or little access to activities, or because they need assistance with daily activities like getting dressed. And those moves tend to come when someone is ill, frail, or grieving.
“Consumers’ expectation of housing and health care is completely unrealistic,” says Thomas West, partner at Signature Estate & Investment Advisors. “There’s a Peter Pan assumption: Since they don’t have a cognitive or mobility issue, they can’t imagine it happening. I try to coach clients to think about the implications of two moves—with the second usually happening in reaction to something—and thinking about what happens to the surviving spouse. That can get people to become more active shoppers.”
And shoppers certainly have plenty to choose from, as the new iterations of senior housing run the gamut. Condos equipped with aging-friendly counters and wheelchair-friendly doorways are popping up near major metro areas in mixed-use condo buildings, adjacent to bike trails and within walking distance of restaurants, entertainment, and transportation. Assisted-living and continuing-care retirement communities offer independent living, but also assisted living, memory care, and nursing homes on campus. They can boast executive chefs, concierge services, and amenities on par with four-star resorts.
Some communities are linked with universities to let retirees go back to school, while others are set up as mini art colonies. Grass-roots senior options are also emerging, from communal communities like Elderberry to multigenerational communities, where seniors volunteer and act as a support network for foster children and their adoptive parents.
“The industry is evolving so much faster than conventional wisdom,” West says, adding that the nursing homes no one wanted to send families to a decade ago are far from the only choice these days.
The result is a dizzying array of options. “Who do you go to in order to understand this stuff?” he asks. “Your financial planner? Accountant? Lawyer? No one is paid to know it.”
Design for Elder Living
Here are some major categories of for-profit options that meld housing and care together.
Note: * Estimates of properties with at least 25 units/bed as of Q4 2017. **Based on average private-pay per diem calculated on monthly basis.
Source: NIC
“Some of this housing will be for people 65 to 85, but won’t be for 85- to 110-year-olds,” Kramer of NIC says. “What happens when they lose their mobility, or [have]cognitive issues?”
For-profit independent-living facilities charge an average rent of about $3,050 a month; assisted living costs an average of $4,577, and memory care is $6,301, according to estimates from NIC. But that is before incorporating the à la carte costs for the help that many people hire to augment what is offered in an assisted-care facility, for example. Those costs can spiral.
But managing the care and finding the caregivers is a problem even for people who can afford the cost, and many cannot: About half of middle-income seniors are not expected to have the financial wherewithal to pay for senior housing, even after selling their existing home, according to a recent report by NIC.
And it could get even harder. Families tend to provide the bulk of caregiving. But the ratio of prospective family caregivers to those who may need care is expected to decline to 4 to 1 by 2030—when many boomers enter their 80s, the age that caregiving needs begin to arise—from 7 to 1 in 2010,according to AARP. As a result, caregivers, who are already hard to hire, could become even scarcer and costlier.
Here are some other things to consider:
Assisted Living And CCRCs
The reason that many people go into assisted living is because they need help with daily activities like getting out of bed or showering. Residents tend to be in their 80s when they move in, older than in the past. That’s partly a byproduct of the financial crisis, when retirees facing depleted retirement portfolios and sinking home prices postponed moves to senior housing until they had no choice. Assisted living went from emphasizing social engagement to providing care—and healthy retirees decided that senior housing wasn’t for them.Continuing care retirement communities, or CCRCs, have challenged that view and attract healthier retirees, like Virgil and Janice Hoftiezer. The Indiana couple, now both 77, had known that their two-story home wouldn’t be suitable as they aged. They had pondered building a new house. But on their frequent trips early in retirement, the couple kept hearing people rave about CCRCs. One big draw was that their long-term care needs would be covered.
“I used to jokingly say that I didn’t want my son-in-law to choose a nursing home for me,” says Virgil, a retired professor at Indiana University School of Medicine. “This was a gift we gave our children.”
7 Shades of GrayAs the baby boomers age, the number of American households in their 60s and 70s isgrowing rapidly.Percent Change in Households, 2011-2016Sources: US Census Bureau; American Community Survey 1-Year Estimates
%50-5455-5960-6465-6970-7475-7980 and Over-1001020304060-64x9.15%
CCRC contracts come in two basic varieties: A rent-based, pay-as-you-go model, and a setup that charges an upfront entrance fee, averaging $330,000 at for-profit facilities and going up to $2 million for higher-end properties, along with a monthly maintenance fee.
Within this group, there are also different contract types. The full-life-care plan tends to cost more upfront, but prepays future long-term care costs the person may end up needing.
Some nonprofit CCRCs have a benevolent fund, partly funded with the entrance fees, that will continue to pay for a resident’s care even if she or he has run out of money to pay monthly maintenance fees. (That’s one reason CCRCs scrutinize finances to gauge who they will let in.) Others charge a lower upfront fee in return for residents paying for any needed long-term care at market rates. In many of these contracts, 90% of the entrance fee can be refunded if someone leaves or dies, but the fee increase can be steep—doubling or tripling when someone goes from independent living to memory care or skilled nursing.
One tip: All fees, including the entrance fee, often can be negotiated, especially at facilities without waiting lists and in markets where developers have gotten ahead of demand.
Retirees may be able to deduct a portion of the entrance fee and monthly fee as medical expenses—the amount above 10% of their adjusted gross income. The exact amount depends on the facility’s total medical expense as a share of its total operating expenses, typically 7% to 30%, says Pamela Thompson, a managing director at Mariner Wealth Advisors in Louisville, Ky. If they do this, it could be a good year to potentially do a Roth IRA conversion, since their taxable income may be lower.
What to Look for—and Avoid
Advisors and retirees recommend a trial run at a community, eating the food and making sure that the activities—and residents—are a good fit and the staff tuned in before diving into needed due diligence. While states offer a level of oversight for assisted-living facilities, it is far from uniform. A2018 Government Accountability Office reportthat examined assisted-living facilities where Medicaid is accepted found that three states didn’t monitor unexplained deaths, seven didn’t monitor medication errors, and eight didn’t require facilities to report suspected criminal activity by the provider.Caution is warranted when evaluating new developments. Many communities try to presell about 60% of the units before breaking ground. West of Signature Estate & Investment Advisors recommends sticking with developments from those that have other strong retirement communities. For context: Communities a decade or older with occupancy rates of 80% or lower should be a source of concern, while the most established communities tend to have occupancy rates of 95% and long waiting lists.
To check the facility’s financial wherewithal, West checks cash on hand, with strong communities typically having a year’s worth of expenses covered.
Among the most common calls that elder-care lawyers field are when someone is evicted from a facility because his or her medical needs or behavior can’t be managed—a reason that Michael Amoruso, a recent president of the National Academy of Elder Law Attorneys, tells clients to understand what the threshold is for discharge, even if the person currently has no conditions.
It is good to be realistic. If someone has early stages of dementia, Amoruso says to make sure the facility has a memory-care wing or floor to avoid an eviction when that person wanders out. Facilities should also have a clear protocol on how they handle medical emergencies, like calling soon after someone is put in an ambulance—not weeks later, he adds.
While weather may be an afterthought, it shouldn’t be, especially as retirees continue to flock to the Sun Belt, where heat waves and storms are increasingly common.
“Older adults and natural disasters and heat don’t mix, so anytime you have a situation where they are exposed to one of these, people die,” says David Dosa, a geriatrician and associate professor at Brown University’s School of Public Health.
While most facilities now have generators and disaster plans, experts on aging recommend checking to see how they fared in past storms and asking about their evacuation protocol, as well as what they do to coax reluctant residents to leave their rooms, for example, for cooling centers that may be set up.
What’s Old Is New Again
Communes, Golden Girls–type of arrangements, and guest houses are making a comeback, as retirees try to get as close to aging in place as possible. Though the majority of people want to stay in their homes, 54% don’t expect that they will be able to, according to AARP. And surveys show a willingness to consider options like co-housing, roommates, or even building pods next to their existing homes to house a caregiver—or aging parents.For the Wardens, co-housing doesn’t completely address the long-term care question. The community had planned to reserve a home for caregiving needs, but has since rented it out, as no one has needed it.
“The community is happy to step in for pet care or rides, but to ask neighbors for potentially intimate help over an extended period of time—that feels uncomfortable,” Jon Warden says, adding that a 104-year-old resident recently went to a nursing home.
Just a fraction of seniors end up living in nursing homes—about 3%—as of the 2010 Census, with many just there for a brief stay; the clear preference is home-based care. And even the initial interim care provided by a community can help reduce total caregiving costs, says Danielle Arigoni, director of AARP’s Livable Communities team.
Maybe Airbnb gets the credit, but seniors are more receptive to home-sharing. Only 29% of older adults said they were not willing to share their homes in 2018, down from 59% in 2014. It may gain even more fans as single baby boomers begin to retire. Some cities recognize the possible demand and are looking at lifting restrictions that have prohibited roommate situations. That could help people repurpose the McMansions that are getting harder to sell to the latest crop of millennial home buyers, Arigoni says. Tech start-ups like Nesterly and Silvernest are seeking to facilitate home-sharing arrangements among older adults.
Another way that some people are trying to tackle the caregiving conundrum is by adding accessory dwelling units, typically 600 to 800 square feet that are akin to carriage or guest houses. Cities and states like Lexington, Ky., and Oregon are removing barriers to such structures.
And 84% of those 50 or older surveyed by AARP said they were willing to create such a dwelling unit to care for a loved one, and 60% were willing to build one to house a caregiver—helping children care for aging parents and also offering a way to attract caregivers in places where public transportation may be limited. The extra perk: It can be rented out and generate income when care isn’t needed.
As baby boomers age, senior housing may go from being something to avoid at all costs to the place to be. When it comes to shopping for a place, retirees may want to take a lesson from their past when they sought a home to raise their families: Find a place that can grow with you for decades to come.
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