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A podcast designed to help retirees and those nearing retirement navigate finances and life planning with expert insights from financial advisor Trevor Lawson. Tune in for practical strategies and inspiring ideas to ensure your retirement years are purposeful, fulfilling, and truly your best chapter yet.
*Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Branch phone: 919-546-0400.
Trevor Lawson: [00:00:00] Welcome to The Retirement With and On Purpose Podcast. I'm your host, Trevor Lawson, and this show is all about helping you not just reach retirement. But truly thrive in it. You've put in the work. Now let's make sure you can enjoy every moment to the fullest.
Welcome back to another episode of The Retirement with an On Purpose podcast. I'm your host, as always, Trevor Lawson, and today we're gonna round out our series on long-term care planning by discussing continuing. Care retirement communities. This is a growing, increasingly popular place for retirees to consider during their aging process.
So today we're gonna talk all about continuing care retirement communities, also [00:01:00] known as CRCs, kind of what they are questions to think through when considering whether or not A-C-C-R-C is right for you. And everything in between, so we'll keep it very high level and I'll be using an article from a A RP magazine.
As a reference point. So for more information that goes a little bit deeper than what we'll talk about today, feel referenced to feel welcome to reference that article in the show notes. But to kick things off, continuing care retirement communities, again, also known as CRCs or life plan communities are long-term care option for older people who want to stay in the same place through different phases of the aging process.
There are a lot of CRCs out there and there are continuing to be more and more that that pop up on the scene as a result of their growing [00:02:00] popularity. So. Your loved ones are encouraged to be a part of this selection process, and a RP encourages that. I, I put my full stamp of endorsement behind that.
It's very strongly encouraged to have your loved one a part of that selection process, but as you're going and potentially looking at different communities and deciding which one may be the right fit for you, here's 10 questions to ask during your your touring process. One, are you a profit or not for profit?
And what's the financial strength of the retirement community? Two, what's included in the monthly fee? We'll talk more about what that could potentially look like here in just a few minutes. Three, how do you help me to maintain my freedom and independence? For what kind of emergency response systems do you have?
Your loved [00:03:00] ones would probably, um. Ask that first, potentially five. How do you measure your resident satisfaction? Can I see your last two surveys? That's, that's a very good question and one that they should be, be able to, to answer pretty easily. Six. How many residents offer input and feedback? Seven.
What is the difference between independent and assisted living and when would I have to move to assisted living? Eight. Can you remain in independent living when your needs change? And how is aging in place supported? Nine. What are the five most popular programs in your community? And who decides what programs and events are scheduled?
And then 10. Can I review your residency agreement? These are fantastic questions and can really help give you a better sense of some of the key differences between communities in your area or region. Now this, [00:04:00] this particular article, um, was written back in 2022, and so these numbers that I'm getting ready to share are going to be, uh, slightly less than figures today.
But most communities charge an insurance fee, so that's, that's the case across the board. They will charge an insurance fee. The average initial payment is about 402,000, but the fees can range widely from 40,000. To multiple million dollars. And again, those are using figures from a couple years ago, so that number has, has gone up some.
But one of the, the big differences in the initial payment amount and then the ongoing payment amount is the, the type of contract that you, that you sign up for. What I mean by that is generally. There are three types of contracts that continuing care retirement communities offer. [00:05:00] Type A, type B, type C.
So type A is the extensive life care contract, and that option carries the highest piece, so the highest upfront. Payment amount for a Type A contract. However, the benefit of that is it will include a full range of service and it will provide unlimited assisted living, medical treatment, and skilled nursing care with no additional cost.
One unique thing about the Type A contract is oftentimes that initial payment may qualify. You'll want to check with your tax professional on this, but it may be considered a, a health expense, at least a part of it, allowing it to be tax deductible. And for those that the buy-in fee is, is several hundred thousand even into the millions, that's a very large potential tax deduction that comes in the way of a health expense.[00:06:00]
One that would create a lot of unique planning opportunities during the year of buy-in, since health related expenses don't carry over into future years. If we've got a very large. Health expense that's potentially tax deductible in the year that you buy in. That could create a unique planning opportunity for us to think about, think a very large Roth conversion maybe that year.
Um, we don't wanna let that, that deduction go to waste since again, health insurance expenses or, or deductions aren't able to be carried forward. So the Type A contract offers not only a lot of. Potential benefits and leveling out the cost over time, but it also creates a very unique tax planning opportunity in the year that you make that initial payment.
And then there's type B and type C. These generally have a [00:07:00] lower. Upfront cost associated with 'em, but the ongoing fees can vary. As an example of type C, the initial enrollment fee, and I'm quoting A-D-R-P-A-A-R-P here may be lower, but residents pay for whatever specific services such as assisted living, skilled nursing, or memory care that they require.
So with a type C contract, it's oftentimes common to see people have a long-term care plan. They'll use if some type of a system living or skilled nursing is, is required as time goes on here in the. The triangle. There are a lot of wonderful continuing care retirement communities and our local business publication, the Triangle Business Journal, every October will publish an article en listing a lot of the local continuing care retirement communities and the, the potential fees associated with them and, and really just more [00:08:00] insights into what our local communities look like.
So. I would en encourage you all to be on the lookout for that. You do have to be a subscriber of the Triangle Business Journal, and this is not a promotional ad to get you subscribe, but, um, it is a wonderful resource that the Triangle offers and gives, uh, residents here locally or those considering moving here, a lot of insights into what our local CCR scene is looking like.
Lastly, I'll wrap up by just saying I've got several clients that are currently living at these continuing care retirement communities, and time and time again I hear from them what a great decision it was to to make that a part of their retirement journey. As an example, I've got now a widowed client who her and her husband made the decision to move into a continuing care retirement community, um, when they were in their, their late seventies, early eighties.
And while his, his passing was very difficult [00:09:00] on her. She has done a fantastic job, say staying involved socially, staying well connected with peers, and a lot of that she credits to the continuing care retirement community, offering ways to stay, stay active with other members of the community and, and providing them endless ways to, to stay engaged in the community.
So. While they do put a price on these, these communities, it's hard to put a price on that social connection that's facilitated through these retirement communities during our, our, our retirement years. And because people are taking note of that, the waiting list at a lot of these communities is, is growing.
Some are even now 10 plus years on, on a weight. So for those that are. Even remotely considering a continuing care retirement community. I would encourage you [00:10:00] sometime in your mid to late sixties to start the, the touring process and potentially if you decide this is, this is something that makes sense for you to go ahead and, and get on a waiting list because.
I only see these lists getting longer and longer as these places grow in popularity. I hope you found this helpful. Like I mentioned, if you want more detailed information on this topic, I would encourage you to check out this A A RP article that'll be referenced in the show notes. Until next time, stay well continue to take care of yourself.
And I'll look forward to connecting again soon.
Thanks for tuning in to The Retirement With and on Purpose podcast. I hope you're walking away with new ideas and a fresh perspective on how to make the most of your retirement journey. And remember, retirement isn't the end. It's your time to live with purpose. Until next time, I'm Trevor Lawson. [00:11:00] Here's to a fulfilling and thriving retirement.