Do I choose the 100% refundable or the 50% refundable entrance fee?

You’ve done most of the work!  You have picked a community and an apartment that you like.  The community offers two different refundability options for this apartment.  All that’s left is to decide on the type of contract to pick.  Which one should you choose?

Let me walk you through the decision.

First of all, you’ll notice that the lower refundability contract is “more expensive” than that higher refundability contract.  For instance, if you have a 100% refundable, $100,000 contract, you would expect the 50% refundable contract to be $50,000.

That’s almost never the case.  It’s higher.  The 50% refundable contract will set you back about $70,000.  The reason for this is simple: the community prefers that you choose the 100% refundable contract.

Like most people, retirement communities prefer more money rather than less.  It helps them to get a bigger entrance fee, since they can use the money for other things during the time that you live in the community.  (There’s a certain amount of money that communities keep on hand for entrance fee refunds, but beyond that, they can use the money as they see fit.)

That’s why the 50% refundable contract is usually not as good of a deal as the 100%.  However, that doesn’t mean that you shouldn’t choose the 50%.  There are two reasons that residents decide on lower entrance fee contracts:

  • They have lower assets and can’t afford to pay the 100% entrance fee, and
  • They don’t care as much about their estate getting a refund after they die.

For those that have sufficient assets and want a refund for their children and loved ones, the higher refundability options are usually the best bet.  It just depends on who you are and what you want out of senior housing.

Is a CCRC an investment?

It’s no secret that entrance fee CCRC’s can be very expensive.  Most seniors sell their homes in order to pay the entrance fee.  With that big of a commitment, it’s not a surprise that people think of entrance fees as an investment.

But is it really a fair classification?  There are several reason that it is not: Residents don’t actually own their own apartment; instead they have a life lease.  If real estate prices rise and the community starts charging more for its apartments, the current resident doesn’t benefit.

As far as I know, there’s no way to actually make money off of a CCRC contract.  Most people actually lose part of their entrance fee due to selecting contracts that have refundabilities of less than 100%.

On the other hand, a CCRC is a huge commitment.  If you think of an investment as an activity that helps secure your future, then your entrance fee is most certainly an investment.  Since your time in the community is valuable, investigating all aspects of the process can help ensure that there are no nasty surprises following the move.

Investors have a term for this process: due diligence.  Due diligence is a period of time prior to completing a deal where the potential investor does all of the research necessary to know if the investment is actually a good idea.  If it isn’t, then the investor can withdraw from the contract and move on to other prospects.

Just as investors complete due diligence, potential CCRC residents should take their time and find out whether or not the community is a good fit.  This includes:

  • Understanding your budget and whether or not the CCRC fees are affordable.
  • Reading and understanding the Resident Agreement and Disclosure Statement.
  • Visiting the community and meeting residents.

Ultimately, a CCRC is not really an investment in the traditional sense.  It is, however, a large commitment, and it shouldn’t be taken lightly.

Caregiving tips, CCRC refunds, dying at home, and organized crime(!)

Some tips for caring for loved ones as they age.  The most interesting: focus on the small things in life.

CCRC entrance refund policies vary widely by state.  Make sure that you read your contract thoroughly.

More of the oldest old are now dying at home.  That’s good news for folks that want to avoid dying while strapped to machines in a hospital ward.

If you’re looking for a new career, try to avoid organized crime.  A 73 year-old grandmother was arrested in Oklahoma for being a big-time pot dealer.

Betty White, fraud, remodeling consultants, and stomach bugs

Betty White has a new show called “Off their Rockers.”  I haven’t seen it yet, so if you saw it, leave a comment below to let me know how it was.

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Have you ever fallen victim to fraud?  If so, you’re not alone.  Approximately 13.5% of the adult population falls victim to fraud in any given year.  Here’s a book on avoiding scams in your life.

If you’re planning on staying in your home, there are consultants who can help you decide on which remodeling projects will help you the most as you age.

There’s a new stomach bug in nursing homes.  It’s sort of like norovirus (the typical stomach bug that causes vomiting and diarrhea), and it’s very dangerous for the elderly.

Readers: What do you want to learn?

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I’ve got some new articles in the works right now.  But, it will be a few weeks before I can post them.  In the meantime, what do you want to know more about?  What issues related to making the transition to senior housing are most pressing to you?

Leave a comment below, and I’ll see if I can’t track down some answers to your most pressing questions!

Photo courtesy of Bilal Kamoon on Flickr.

Technologies to help you stay home, long term care costs, doctors going to doctors, and financial scams

If you plan on living in your home forever, take heart.  GE is creating technologies that will make it easier to stay put without having to hire help.

How much is long term care in your state?  Here’s a quick estimate for each state.

Even doctors have trouble convincing their parents to go to the doctor.  This daughter of a doctor noticed her mother having trouble swallowing.  The symptoms progressed until the mother ended up in a coma.

Financial scams are a problem for seniors.  The SEC is considering investigating.

Nursing homes criticized, exercise is good for you, summer’s coming, and qualifying for Medicaid

Families for Better Care, a consumer group, has blasted nursing homes calling them “too profitable.

We’ve probably all seen this in the news, but here it is again: the best thing that you can do for yourself is go for a walk!

Summer’s coming.  Get your air conditioner checked before the heat waves hit!

Paying for a loved one’s nursing home bill often means a lot of financial footwork in order to qualify for Medicaid.

Getting the most out of Social Security, student loan debt, divorce, and stroke

Some food for thought on collecting Social Security: number of years worked is factored into your payout, payments could increase at 8% annually after full retirement age, and spouses can claim benefits.  There’s much more information in the article, so go check it out.

If you are over 65 and still have student debt, take heart; you’re not the only one.

Want to make your adult children happy?  Consider getting a divorce.

New findings: a stroke can change your sexual orientation.  Even more, another study has found that post-stroke depression isn’t being treated in most patients.

Caregiving, long term care insurance, masculine retirement communities, oranges, and downsizing

More and more companies are leaving the long-term care insurance market.  This creates even more reason to start your own savings account to cover the cost of care.

Being a caregiver is really hard, but there might be help on the way. 

Are retirement communities designed only for women?  This writer thinks so and offers suggestions for making the spaces more masculine.

Eating more oranges may help decrease stroke risk in women.

The Unclutterer offers advice for an older couple downsizing to a smaller home.  (By the way, this is one of my favorite blogs!)

End-of-life care, nursing home fiction, retirement options, best CCRC’s, and CCRC vacation networks

There’s a new book out about end-of-life care called “The Best Care Possible.” Here is a presentation he made a few years ago in Dallas:

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One avid reader thinks that there is a lack of fiction written about long term care.

Traditional retirement might be too expensive for some seniors.  But, there are other options: cruises (it costs about the same as an assisted living and meals are included), cohousing (you’ve always wanted a roommate, right?), and pods (moving into a small apartment behind your kids’ homes).

If you’re open to relocating to a new area for your CCRC, check out this list of the top 50 communities in the United States.

Here’s yet another reason to move into a CCRC: you might have access to CCRC’s all over the country when you vacation.