Senior Housing: Exploring Independent Living, Assisted Living, CCRCs, and Skilled Nursing
Written By: John O’Callaghan CFP®
As people age, they often face an on-going decision of where to live. For many seniors, the thought of leaving their homes and downsizing to a smaller space is daunting. However, there are a variety of senior housing options that can meet the needs of older adults at different stages of their lives while ensuring their health needs are met at the same time. Therefore, we will be exploring the current differences between independent living, assisted living, continuing care retirement communities (CCRCs), and skilled nursing, as well as their average costs.
Independent living communities are designed for older adults who are able to live on their own, but want to downsize to a smaller space with less maintenance. These communities typically offer amenities such as meal plans, transportation services, and social activities. Independent living residents may also have access to additional support services, such as housekeeping and laundry services. This type of housing is often marketed as active adult communities, senior apartments, or retirement communities.
Some have mixed feelings about “downsizing” and the idea of moving to a retirement community. However, through countless conversations with our clients we have found that in some cases it proves to be financially and physically in their best interest. I remember from a conversation I had with a client recently, they said “it just made sense – we loved our home and large yard, and it served us so well raising our kids and having room for grandkids, but we realized that the maintenance was starting to catch up on us.”
Cost: According to A Place for Mom, the average cost of independent living in the US is $2,552 per month. However, costs can vary widely based on location and amenities.
Assisted living communities are designed for older adults who need help with activities of daily living, such as bathing, dressing, and medication management. Residents typically have their own apartments or rooms and receive assistance with tasks that they are no longer capable of independently. These communities may also offer additional services, such as transportation and recreational activities.
Cost: The average cost of assisted living in the US is $4,500 per month, according to Seniorliving.org.
Continuing Care Retirement Communities
Continuing care retirement communities (CCRCs) are designed to provide a range of care options for older adults as they age. CCRCs typically include independent living, assisted living, and nursing care all on one campus. Residents can move between levels of care as their needs change, without having to move to a new location. These communities often require a large upfront payment, in addition to ongoing monthly fees.
Cost: The cost of CCRCs varies widely based on location, level of care, and contract terms. According to SeniorLiving.org, the average cost of a CCRC is $3,000-$5,000 per month, not including the upfront entrance fee.
Nursing Homes and Skilled Nursing Facilities (SNF)
Most Nursing Homes and Skilled Nursing Facilities generally have similar services provided, though they differ in the timing of their clientele’s care needs. Nursing Homes provide a more permanent living arrangement for someone in need of 24/7 care. Whereas, Skilled Nursing Facilities function more so as a temporary residence for necessary medical rehabilitation. Skilled nursing care can also be provided at home by registered nurses, physical therapists, and other medical professionals. Fundamentally, both types of facilities/services provide care for people with serious medical conditions and those recovering from surgery or other procedures.
When seeking care of this level, it is important to understand the duration of care needed given the distinction in Nursing Home and Skilled Nursing services. The duration of care needed brings to light the conversation of how you can approach funding any nursing care costs. And that said, generally if you’re in a SNF for a shorter period (up to 20 days), Medicare will pick up the majority of the expense. How ever, long-term stays in a SNF can get expensive.
Cost: The average cost of a skilled nursing facility in the US is $8,365 per month, according to Genworth's 2021 Cost of Care Survey.
Long-Term Care Insurance Planning Strategies
As we take a look at the different options available for senior housing, it’s evident that it can be a costly addition to your budget, without even accounting for inflation. Depending on your level of housing and care needs, now and in the future, you could expect monthly expenditures to inflate similar to those of healthcare costs.
If you’ve done research on what some strategies are to plan for senior housing and care, you may have come across long-term care insurance. Long-term care insurance is one way in which seniors can help prepare for the future costs associated with assisted living and nursing home care. Ultimately, this type of insurance can assist in mitigating the overall cost of care and protect your net worth. However, long-term care insurance can be expensive and isn’t right for everyone. It’s important to fully understand the insurance, what it covers, when to consider purchasing a policy, and the specific benefits associated with the particular solution that you are considering.
Long-Term Care needs vary amongst many individuals and families, but ultimately, as generations age the need for some sort of care becomes inevitable. So, if appropriately planned for in advance, long-term care insurance can play a vital role in ensuring you and your loved ones can age comfortably.
In conclusion, there are a variety of senior housing options available, each designed to meet the needs of older adults at different stages of their lives. When considering senior housing options, it's important to consider factors such as location, amenities, and cost, as well as the specific needs and preferences of the individual. With these factors driving the cost of housing and care, it’s also important incorporate the source of funding in your equation.
This material has been provided for general informational purposes only and does not constitute either investment or tax advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a financial advisor or tax preparer.