Cost of Care Considerations for Retirement | Retirement Planning

Did you know that Americans are five times more concerned with burdening their family with retirement than they are with death? According to a Genworth study, this is a true worry for individuals. Considering the cost of care can range from $1 million to $300,000 in a 10-year period, we can see how this would make individuals uneasy. Furthermore, every institution offers different services and amenities for individuals that may make the cost of retirement rise. This does not even include concerns about inflation. That is why it is important to consider certain factors to make the best choice in your retirement planning.

The Entry Fee

An entry free is an up-front cost to move into a continuing care residential community (CCRC). It often pays for the underlying mortgage and for maintaining the property. In other words, this payment is for maintaining a well-functioning facility. The cost of an entry fee can be as low as $80,000 or as high as $600,000.

However, the average costs is typically around $250,000. This is a considerable amount of money, even in the lower range. You may be asking yourself what makes the entry fee vary so widely? Your location is very important. Those that reside in the Northeast region can expect to pay a higher entry fee, while those that live in the Midwest region can expect lower entry fees. Changing locations can impact how much you will expect to pay for this fee.

You should also consider whether this fee is refundable. Most institutions do not have a refund policy, meaning that if you stay for a year or 10, they will not be returning your money. Other institutes that do offer a refund policy typically ask for a higher entry fee. Although this may not seem desirable, if you wish to leave a legacy to your next-generation family members, this may be an option worth considering.

The Monthly Fees

Monthly fees can cover a wide range of services and amenities such as meal plans, gym access, and social activities. Most fees range from $2,500 to $4,000, depending on the services that the institution provides. It is crucial to consider these services as you plan. If you do not plan to be involved in several services or activities, consider a different institution to avoid paying extra.

Included in your monthly fee and in your entry fee is your healthcare cost. Under this cost of care, there are 3 options to consider.

  1. The first option is choosing a higher entry fee. This option will cover most of your health care costs and typically offers a fixed monthly fee. If you require nursing care or assisted living, these costs will mostly be covered.
  2. The second option is paying a lower entry fee along with some health care assistance. This option will cover a set number of days that nursing care or assisted living will be covered. After this time period, you will be required to cover the extra costs.
  3. The last option is paying a low entry fee and a low monthly fee. In this case, less health care services will be covered and you will be offered a pay-for-service. In other words, if you require assisted living or nursing home care, you will be responsible for paying the rate.

Consider these factors when planning for retirement and cost of care in an assisted living or nursing home facility. The cost of care can be daunting, but it can be done with the appropriate planning.

Genivity is here to help. We place emphasis on helping advisors with goal-based financial planning that incorporates health wealth factors to provide personalized reporting. Genivity can assist you in determining the future costs of your care, and allow you more information needed to plan for your future retirement. If you are interested in understanding your health wealth factors, ask your advisor for an assessment with Genivity’s HALO.