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How to Help Clients Understand Retirement Housing Options

Retirement housingMany retirees see their home as a symbol of comfort and independence that they want to keep as long as possible. However, far too often, reality turns out differently. Most conventional homes present accessibility problems that impair the comfort and independence of elderly people, requiring expensive modifications or an unplanned move to an assisted living facility caused by a health crisis.

Whether you’re advising clients ten years into their retirement or helping middle-aged clients plan for their golden years, you’re doing them a disservice if you don’t bring up the sometimes uncomfortable discussion of retirement housing and end-of-life care.

Retirement housing is designed for comfort and accessibility, providing the most independence possible for the residents’ health status. One way to distinguish between various types of retirement communities is to look at the continuum of care the community provides:

  1. Independent Living—Individuals are able to perform all or most of their activities of daily living without assistance. This includes eating, bathing, dressing, toileting, transferring (walking) and continence.
  2. Assisted Living—Residents require some level of assistance with activities of daily living. Depending on the level of need, services may be provided at home or in a facility.
  3. Skilled Care—Residents receive 24-hour care provided by a registered nurse or licensed practical nurse, and services are almost always provided in a facility.

Some retirement communities focus only on one phase of the continuum, while others, such as a continuing care retirement community, contractually guarantee access to the full continuum of care. A retiree may be able to live independently when he or she first joins the community and later receive assisted-living and skilled-nursing services.

Most continuing care retirement communities share some common features. In addition to a substantial entry fee, residents must generally be able to live independently upon entry. These communities typically cater to middle- and upper-income retirees whose average age of entry is in their late 70s to early 80s.

The type of contract and financial model offered among continuing care retirement communities varies. Some communities offer multiple contracts. Some require a higher entry fee, but cap the amount for future care services. Others take a fee-for-service approach, which means a resident’s monthly rate will increase to reflect the market rate when care is received.

As a CPA financial planner, you can help your clients understand the financial implications of each type of retirement housing contract and its impact on their estate. You may also need to get the family attorney involved to ensure the contracts are solid. No one wants to face his or her eventual end of life, but everyone wants to be as comfortable as possible—and that starts with your guidance.

Are you interested in learning more? On June 3 from 1-2:45pm ET, the AICPA Personal Financial Planning Section will host a free webcast on “Practical Planning for Aging and Elder Issues,” which will include a discussion of many retirement and aging issues, including long-term care.

Brad Breeding, President of My LifeSite. Brad provides information on continuing care retirement communities to CPA financial planners, advisors and other planning professionals. He presented on this topic at the 2015 AICPA Advanced PFP Conference (access recording/materials).

Retirement sign image via Shutterstock




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