Keys to Finding the Right Retirement Community

older couple taking a home tourBy Philip Moeller

Finding a good fit in a retirement community is an ongoing concern for seniors and their families. The number of people seeking such solutions is rising as the nation ages. But for the past several years, many families have been unable to afford the move to a community.

That's because the traditional source for paying the often hefty community membership fees has been from the sale of a primary residence, and the recession and collapse of real estate markets sharply reduced the ability of many seniors to sell their homes. Occupancy rates in many communities declined, and so did the pace of new construction.

Now, real estate markets around the country are recovering, home sales have picked up and the recovery is slowly making its way to retirement communities. A big unresolved question is whether seniors and their families will once again find such communities attractive or continue to pursue other solutions.

Aging in place in existing homes, to name a major alternative, has been marketed as an attractive living choice, and has a growing cadre of vendors and marketers touting it as a better, and less expensive, option than a retirement community.

At the same time, healthy and well-educated seniors are continuing to post impressive longevity gains. Many continue to follow active lifestyles and don't want to move to a place they may see as an "old folks' home." For their part, retirement communities have been pushing hard to change their reputation and portray themselves as lively and active places for seniors to pursue relatively carefree lives.

Retirement communities come in all types and sizes. Some are for people with existing physical and cognitive challenges and specialize in assisted living, nursing care and housing people with Alzheimer's and dementia needs.

The choices are broader for healthy seniors and usually involve what's called a continuing care retirement community, or CCRC. These communities are not all alike and offer different levels of care and payment models. The most fully equipped CCRCs provide living units for healthy residents but also offer on-site facilities and health care staffing for those needing assisted living, full-time nursing care and even Alzheimer's facilities. Their strongest selling point is in reassuring residents and their families that a person can stay at the CCRC for the rest of his or her life and receive whatever care he or she may need.

There are more than 1,850 continuing care retirement communities around the country, according to LeadingAge, a senior housing advocacy group based in Washington, D.C. Half have less than 250 units, and only a handful have more than 1,000. More than 80 percent are operated as nonprofits, the Leading Age says. The average age of new residents was about 78 in 2005 and has risen to the early 80s since then.

The National Investment Center for the Seniors Housing & Care Industry, a nonprofit based in Annapolis, tracks activity at about 1,100 communities that collectively provide more than 355,000 living units. Occupancy rates vary by market and community, but averaged about 90 percent at the end of the second quarter, the center reported, which is up more than 2 percent since 2011. Average monthly rents are $2,700 to $2,900, and more than 3,800 new living units are under construction.

When shopping for a CCRC, here are a few things families should look for:
1. Costs. There are membership fees that vary by the size of living space. There also are monthly charges that can cover meal plans, health care costs and other variables. Make sure you understand your total out-of-pocket expenses.
2. Refund policy. Some homes have a high percent of refundable entrance fees, and others may have a sliding scale depending on the length of residency.
3. Taxes. A portion of both your membership and monthly payments may be tax-deductible as health care expenses. The threshold for health deductions was raised to 10 percent of taxable income in recent federal tax changes. But it will remain at 7.5 percent until 2016 for taxpayers ages 65 and older.
4. Business history. How long has the community's parent organization been in business? Many CCRCs are operated by religious or nonprofit organizations and have existed for 50 to 75 years. Find out the facility's track record.
5. Accreditation. Some CCRCs pay to be evaluated by a private organization called the Commission on Accreditation of Rehabilitation Facilities. Not all communities seek this endorsement, and not having it is not necessarily a negative mark. State oversight standards also vary, so knowing that a home met CARF standards might be a factor in your decision.
6. Financial records. Most communities are nonprofits, and their finances should be transparent. Also, some may fund their operation with bond sales, and therefore may have bond ratings that provide a sense of their financial strength. Communities should share this information. If they are not willing to do so, or if you are not assured for any reason of their financial health, you should look elsewhere.
7. Resident and employee metrics. Prospective CCRC residents should seek information on current resident and staff satisfaction as well as staff turnover. A satisfied and stable CCRC staff is a good sign.
8. Benevolence policy. Many CCRCs have some charitable arm to help residents continue to stay in the community even if they run into financial difficulties. Ask a community some "what if" questions and learn what would happen if personal financial difficulties occurred.
9. Health care arrangements. Find out the community's proximity to medical care. Are there physicians and hospitals nearby? Does the CCRC have health professionals on the premises? Does it provide in-home health services, which are important to people in independent living arrangements as they begin to encounter more health issues?
10. Exercise and wellness options. Make sure the community has the resources and on-site professional support to provide tailored and supervised fitness programs.
11. Resident control. The best retirement communities are moving toward service plans, multiple on-site restaurants and other facilities that give residents control over how they live in the community. If a community has too much of an institutional feel for you, continue looking.

See the second in this two-part report: Retirement Communities Today: Not Your Grandfather's Old Folks' Home

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