Shopping for a retirement community typically requires a lot of research, and your final decision will be based on many factors–care services, location, amenities, quality ratings, and more–though price often is one of the most-heavily weighted.
As you are looking at the side-by-side costs of communities, you must ensure you are making an apples-to-apples comparison about what services are and are not included in the pricing so that you may draw a fully informed conclusion about which senior living option is right for you.
What is included?
When comparing monthly fees, be sure you know exactly what is included in the price. Suppose, for example, you are evaluating two independent living retirement communities. The communities are comparable in many ways, and you like them both. However, the monthly fee for one community is 25 percent less than the monthly fee at the other community. One reason for this may be that the higher priced unit includes more services under the base rate, while the lower priced unit operates under more of an à la carte arrangement, whereby you pay separately for additional services. Depending on the services you desire, you may ultimately end up paying more per month at the community with the lower base rate.
This is also really important if you are evaluating assisted living providers. Most assisted living facilities have a base monthly rate, but this is almost never the rate that a resident actually pays. The total monthly rate ultimately depends on the level of services needed. Whereas in an independent living community, your total monthly cost often depends on the services you desire, in an assisted living community, it is usually more about the services you need. Determining the level of services a resident requires begins with an accurate assessment of needs. This is a fairly lengthy questionnaire and assessment that an assisted living provider will go through with each new resident.
Additionally, some assisted living providers operate under an all-inclusive model, while others operate à la carte. An accurate comparison of the two requires that you understand which model they utilize and exactly what is included, particularly as it relates to assistance services such as housekeeping, bathing, dressing, feeding, etc.
What about Entry Fee Retirement Communities?
In addition to monthly fees, some retirement communities require an up-front entry fee that can range from below $100,000 into the hundreds of thousands or more. Often referred to as continuing care retirement communities (CCRCs) or life plan communities, these facilities are unique from other choices due to the fact that they typically provide residents with contractual access to a full continuum of care, beginning with independent living and also including assisted living, memory care, and/or skilled nursing care–usually in one location.
With continuing care retirement communities, in particular, comparing purely on price without understanding the various contract types can be a big mistake.
>> Use this tool to compare entry fee retirement communities side-by-side.
There are a number of different contract types available among CCRC providers. The general idea is the same as described above in the sense that some are all inclusive (“lifecare”) while others are à la carte (“fee for services”). However, since residents of CCRCs may eventually transition from independent living to assisted living or other forms of care, it is important to consider not just the cost today, but the lifetime cost.
Using a similar example as above, suppose you are interested in two different CCRCs. The monthly fees are about the same, but one requires a higher entry fee. Does this mean the one with the higher entry fee is more expensive? Not necessarily. If you closely compare the contract you may find that the one with the higher entry fee offers level lifetime monthly fees regardless of how much care may eventually be required, while the one with the lower entry fee requires residents to pay the full cost for healthcare services when needed. In other words, the choice is to pay more up-front but have predictable monthly fees for life, or pay less now and potentially have to pay more per month when care services are needed.
Selecting a retirement community is one of the biggest financial decisions most people will make in their lifetime, so when comparison shopping, it is crucial that you fully understand the costs associated with each senior living option and the services you will receive in return. In short: don’t make the mistake of comparing apples to oranges when it comes to different communities’ fees!