A little bit more on Continued Care Retirement Communities (CCRC's) to reflect some of our current thinking about budgeting for the later years. (The somewhat controversial idea of budgeting up to age 85 and dying broke)
A recent review of our finances indicates we should be safe for much, much longer than that, but it brought up some more advanced thoughts about
planning in the earlier years.
Several of our friends here have indicated they have been through the process of finding continued care for parents or relatives... and with that, the problems inherent in finding a suitable place, either for nursing home or independent living, AND the work involved in liquidating a former home, a project that could take weeks or months.
So here's the "deal"! Planning for realistic "old age" living, that is based on many factors:
1. Money... Of course... but instead of an open ended plan (dollars only), a plan for specific budgeting, that is to some extent finite. In this case (CCRC's)... a dollar amount per month that covers all costs, without the necessity of tending a budget, paying bills, and having to worry about repairs, upkeep, food, and the calendars that most of us keep to stay ahead of the game. Keeping later years simple.
2. Accessibility... To hospitals, shopping, entertainment, and the inside the house accessibility for bathroom, wheelchair, handholds, emergency contacts, and safety/security. Also... not having a car.
3. A stepped process in communities such as ours... with;
a. 65 Villas (private individual houses like the one we live in today) ..
b. 65 apartments, from a studio , up to a 2BR,2BA...
c. 45 assisted living units
d: a complete therapy/rehab center
e: 65 unit nursing home with separate Alzheimer's facilities.
4. Location... This is a major consideration, as many of the more popular, urban or warm weather facilities, are in higher income areas.
5. Contracts... some CCRC's have high up front costs, others none. The facilities also vary... from none, to pools, massage, bars, golf, restaurants etc... fees from upfront $500,000 down to none, and monthly costs from $4,000, down to $1,800. (including meals etc). See more general info here:
http://www.seniorhomes.com/p/ccrc-costs/
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Let me back off here, and give some numbers for our area... likely in the lower cost bracket. The facilities are all relatively new... begun in 2000. The price for a 2BR 1BA apartment is (no up front or contract fee) $2000/month plus $500/mo for second person, which includes:
Apt. Kitchen... refrigerator, stove, handicap equipped, elevator, 2 meals/day in formal dining room. Transportation to doctor, shopping, entertainment (twice a week) activity rooms (cards, bingo, library, hair salon, presentations/entertainment). Available garage, Free TV and Internet.
Now, here's my thinking about using this arrangement to budget for the later years... In our case, age 80, some 3 years from now. The $2500/month... comes to $30,000/yr. This amount essentially covers all living expenses except for personal care, clothing and supplemental food... (perhaps another $2,000/yr.) and about $8000 in non covered medical expenses... total $40,000/yr.
Since our Social Security is $25,000/yr... it means
$15,000 per year from our savings. If we live to age 90... $150,000 from assets.
The sale of our house would much more than cover that... Leaving most of our current assets for an estate.
This may seem much ado about nothing, but if I were to begin again to budget long term, fixing a number to the expenses in the declining years would have made me more secure... Did I figure in inflation? No... but it's easy enough to do.
What could this mean to you? A way to plan for the amount you can spend during the active years.... age 60 to 75... when you're going through your bucket list. So instead of planning to spend evenly for 30 years, looking at the "quiet years" as a fixed expense, and longer term planning, as a 2 tiered project.
I think your children/estate would thank you for that.
Not presented as an argument, or even a recommendation, but for something to think about, as a way to fine tune planning for people like us who live
frugal and happy.