We’ve all heard it: “Be sure to move while you can still walk in.” That advice refers to moving to a Continuing Care Retirement Community (CCRC) and by that adage, you definitely want to move before you experience a dramatic change in your health. Researching your options, making a plan and deciding when the time is right are all very important. At Bragg Financial, we are happy to assist our clients as they navigate the many choices available and begin making plans to transition from their home to a retirement community. CCRCs are not the only option, but for the purpose of this article, I will focus on them by addressing often-asked questions and offering recommendations that I hope you will find helpful.
Continuing Care Retirement Communities promise to provide you with a home, meals, activities, amenities, and healthcare throughout the remainder of your life. Housing options range from standalone homes to villas and apartments. Some CCRCs offer homes for purchase, while others charge an entry fee. All CCRCs charge a monthly fee.
Is it better to make a purchase or to pay an entry fee? It truly boils down to your preference for a particular community and if you choose to maintain equity in your home. Both options provide the path for your continuing care. However, the purchase of your retirement community home creates an asset that can be passed onto your heirs. It also comes with an annual property tax bill. If you choose a community that charges an entry fee, a portion of that fee is tax deductible as pre-paid medical expenses. Whether you choose to purchase or to pay an entry fee, a portion of monthly fees is also tax deductible.
If we decide on a CCRC that has an entry fee, should we choose a refundable option? It’s not necessary. For refundable options, normally offered at 50% or 90%, you will pay more for your entry fee in order to have a portion of it refunded should you move or when you die. In response to this same question, Phillips Bragg recently said, “If you want to buy life insurance through your retirement community, then choose a refundable option.” According to marketing counselors, most people do not choose to take the refundable options. Worth noting, even if you select a non-refundable option, the entry fees at many CCRCs are refundable on a declining basis over 12 to 50 months, should a new resident not survive that period of time.
When making your plans to move to a retirement community there are a few steps that we recommend.
If you decide that a CCRC is not for you, we are happy to talk with you about the alternatives. There are other options for you to consider.
I hope this information and the recommendations are helpful. Please let me know if we can assist you if you are considering a move. We’ll be glad to talk with you about your choices and we’ll “run the numbers” so that you know that you can be comfortable with your choices. Making a plan and taking action are the keys to your successful move. We’re here to help.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.