CCRCs and the housing decisions faced by older adults: how financial professionals can help.

• Author: Breeding, Brad C.
• Position: Continuing care retirement communities

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The choice of living arrangements can have a dramatic effect on aging clients' financial future. Financial planning professionals can help clients assess the complex financial arrangements that accompany each option.

As the senior population continues to grow rapidly over the next 20 years, financial planners and tax advisers are sure to receive an increasing number of questions related to elder housing decisions and the financial implications of various choices.

With the use of online tax preparation programs and the latest innovations around online financial planning and investment programs, financial professionals have an opportunity to expand their breadth of service and increase client loyalty by equipping themselves with the knowledge and information necessary to effectively guide their clients through the often overwhelming decision process related to senior housing choices. Moreover, they can be the catalyst for prompting their clients to take a proactive approach to planning for the later phases of retirement, thereby helping them avoid difficult, and often costly, situations.

This column provides an overview of important housing considerations, the senior living landscape, and a few specific ways that financial planning professionals can help clients in this area.

To Stay or Not to Stay

Although most people want to stay in their homes as long as possible, it is important to recognize that this is not necessarily the best choice in every case, particularly once they are unable to remain socially active and care for themselves. A Washington Post report on gerontology professor Stephen Golant s book Aging in the Right Place says the author makes the case that "the concept of aging-in-place has become a mantra in recent years that might prevent older adults from seeking healthier, more holistic alternatives" (Kunkle, "Aging in Place Concept Has Been Oversold, Professor Argues," The Washington Post (March 5,2015)).

For a family caregiver, the physical, emotional, and financial stress can be dramatic. Various studies suggest that up to 70% of family caregivers have clinically significant symptoms of depression and are forced to take time away from their own friends, family, and careers (see, e.g., Caregiver Assessment: Voices and Views From the Field (Vol. 2), available at tinyurl.com/ jn8ke36). In fact, the average of lifetime lost wages and benefits of a family caregiver is almost $304,000 (see The MetLife Study of Caregiving Costs to Working Caregivers, available at tinyurl. com/zqrgm97). Therefore, the notion that staying in the home is the least expensive option is not always true after accounting for the cost that is transferred to the next generation. Of course, if home modifications and hired care are required, they can push the cost substantially higher.

This is not to suggest that older adults should not stay in their homes. But it is important for clients and their advisers to consider the various implications of this choice and plan accordingly.

Confusing Terminology

For those who think that a senior living community could be a viable alternative to aging at home, one area that causes a great deal of confusion is the terminology--trying to understand how one senior living provider differs from another.

To lead clients through the research process, financial planning professionals should be aware of the four main categories of senior living.

Independent Living Only

Retirement communities that only provide independent living mainly include active adult living communities, which are planned residential developments with free-standing, single-family homes that are designed with seniors in mind. This category also includes apartment-style retirement communities that cater to those who are able to live completely independently, without the need for assisted living or health care services. Residents have the freedom to hire their own private caregivers.

Independent Living With Limited Care

Communities that provide independent living with limited care most often include apartment-style residences, although some may provide villas or townhomes. The major difference between this category and the...