Is Long Term Senior Living "Rent" A Wise Way To Go?

[WordsMyth43]

I'm doubtful that moving from a paid off home into a very nice - and relatively expensive - "monthly rental" senior living facility is a wise choice.

We're in our 80s. We're financial quite sound. Our 2,000 Sq. Ft.+ home has long been paid for (we've been in it since 1976). The very nice senior living facility - a local Brigtview location - will cost between $11,000 and $13,000 per month for a 2 bedroom, 2 bath with balcony unit. That cost is relatively "all inclusive" (meals, utilities, most activities, most transportation, etc. but with extra fees for things like a second parking space, meals and drinks in the "pub", etcetera).

We've done a financial projection (with professional help/oversight) and we could afford to continue to live there for about 26½ years, and I don't expect to live to be 108 years old!

BUT ...
We'd be giving up and almost certain financial stability we can easily afford for a landlord rental situation which could increase significantly over time, depending on increases in the "average cost of living," The facility says it only raises it's cost between 8-10% any year, but that is NOT of course "guaranteed" in the contract. It's only a guideline ostensibly based on past performance.

Quite simply, we'd be moving into a financial situation in which we will be constantly "spending down" our retirement savings and relying on: (1). We'd not outlive our savings; and (2) that the costs would not increase at higher rates that would much more quickly deplete out savings.

The business does no "do" MedicAid. If you run out of money, you have to leave.
That sounds like a rather risky financial situation that would NOT be under OUR control.

I've just not convinced that it is a wise way to go.

I'd appreciate your thoughts.

 

[That Lady in PA]

I've just not convinced that it is a wise way to go.

There's your answer right there!

You are the only one who can determine if that choice is right for you.

Why are you considering this place? What appealed to you?

 

[Aunt Bea]

I would hold off until my health and my ability to maintain my home were at a point where the country club lifestyle of a senior living facility made sense to me.

When you do your planning consider not only your current income and expenses but also the potential income that the money from the sale of your home may generate.

I would also consider an interim move to a basic apartment and the cost of using many of today’s convenient services to duplicate the amenities offered by a senior living facility.

Today you can piece together, food delivery, transportation, cleaning, services, laundry, etc… at a cost that is substantially less than a luxury senior living facility.

I wouldn’t rule out a move to a nice facility but I would wait until it made sense for me and my situation.

Good luck with your decision!

 

[OldOld]

How about this...
Sell your 2000 sq ft home, and buy a 1000 sq ft condo. Rent out this condo for income. Move to this fancy senior living facility to try out. Do not lock into a long term contract with this facility. If you decide the facility is not a good fit for you or they raise the rent too much later on, you can always move back to your condo and hire a full time in-home aid for half of the facility cost.

 

[WordsMyth43]

I would hold off until my health and my ability to maintain my home were at a point where the country club lifestyle of a senior living facility made sense to me.

When you do your planning consider not only your current income and expenses but also the potential income that the money from the sale of your home may generate.

I would also consider an interim move to a basic apartment and the cost of using many of today’s convenient services to duplicate the amenities offered by a senior living facility.

Today you can piece together, food delivery, transportation, cleaning, services, laundry, etc… at a cost that is substantially less than a luxury senior living facility.

I wouldn’t rule out a move to a nice facility but I would wait until it made sense for me and my situation.

Good luck with your decision!

Thanks for your input and ideas.
My health and abilities are very sound (at 82). My wife's "comfortable mobility" is somewhat diminished by arthritis (at 79).
I've carefully factored in future income changes (sale of house, etcetera). We've been cautiously, but not always successfully, been exploring and adding in-home services such as cleaning, food delivery, and such. We've thus far been rather badly disappointed by a couple "meal delivery" services (Meals on Wheels, Factor); we ended up simply not eating many of the meals and throwing them out. That's certainly not acceptable.
I'm trying to keep an open mind, but after almost a year's very careful study and consideration, I'm just not convinced that it's a basically wise financial decision/choice. I don't begrudge such highly-rated and praised by residents (we've toured and consulted in great detail) facilities. They're a business and they have to make a profit to stay in business. I just think the financial "model" is flawed for many seniors ... even those who are financially quite sound.

 

[CallMeKate]

Quite simply, we'd be moving into a financial situation in which we will be constantly "spending down" our retirement savings and relying on: (1). We'd not outlive our savings; and (2) that the costs would not increase at higher rates that would much more quickly deplete out savings.

Personally I'd have to add a risk #3 here... and that would be that even solidly established places can close down/sell out, etc. meaning lots could change if management changes and even more if for whatever reason in the next few decades, they'd close down.

But that's just me... I am extremely risk-averse, but it did come to mind and it's certainly not impossible in today's economic environment.

 

[MACKTEXAS]

The very nice senior living facility - a local Brigtview location - will cost between $11,000 and $13,000 per month for a 2 bedroom, 2 bath with balcony unit. That cost is relatively "all inclusive" (meals, utilities, most activities, most transportation, etc. but with extra fees for things like a second parking space, meals and drinks in the "pub", etcetera).

Only high-end apartments in prestigious neighborhoods of major metropolitan areas, such as Manhattan or Los Angeles can command these prices.

 

[Trish]

I'm doubtful that moving from a paid off home into a very nice - and relatively expensive - "monthly rental" senior living facility is a wise choice.

We're in our 80s. We're financial quite sound. Our 2,000 Sq. Ft.+ home has long been paid for (we've been in it since 1976). The very nice senior living facility - a local Brigtview location - will cost between $11,000 and $13,000 per month for a 2 bedroom, 2 bath with balcony unit. That cost is relatively "all inclusive" (meals, utilities, most activities, most transportation, etc. but with extra fees for things like a second parking space, meals and drinks in the "pub", etcetera).

We've done a financial projection (with professional help/oversight) and we could afford to continue to live there for about 26½ years, and I don't expect to live to be 108 years old!

BUT ...
We'd be giving up and almost certain financial stability we can easily afford for a landlord rental situation which could increase significantly over time, depending on increases in the "average cost of living," The facility says it only raises it's cost between 8-10% any year, but that is NOT of course "guaranteed" in the contract. It's only a guideline ostensibly based on past performance.

Quite simply, we'd be moving into a financial situation in which we will be constantly "spending down" our retirement savings and relying on: (1). We'd not outlive our savings; and (2) that the costs would not increase at higher rates that would much more quickly deplete out savings.

The business does no "do" MedicAid. If you run out of money, you have to leave.
That sounds like a rather risky financial situation that would NOT be under OUR control.

I've just not convinced that it is a wise way to go.

I'd appreciate your thoughts.

The facility can say what it likes, unless it is in the contract, it is not legally binding. I would think that, even the facility does not know what it's costs will be in the long-term.

I assume that you are thinking of selling up and moving to a place which you hope will be more suitable for when you are older and also with your wife's arthritis and mobility issues?

I am very risk adverse and would not put myself in a position where there was any possibility that I would one day run out of funds. I also imagine that, if you made the move to the facility and then decided it wasn't for you, it would not be easy or inexpensive for you to move again.

If I were you, I would be looking at other options, perhaps a property which is or can be adapted for any existing or future medical needs. A bungalow or flat perhaps where all the rooms are on one floor, no steps, a wet room etc.

 

[CallMeKate]

I like some of the ideas here. One seemingly good suggestion would be moving to a smaller condo (like @OldOld said) ... the profit from sale of current home would probably pay for a maid (possibly even live-in) and a cook that would amount to a whole lot less than $12K a month. Wouldn't be needing to use current savings in that scenario. Some tough choices coming your way, eh? I hope you'll stick around and let us know what you and your bride ended up deciding.

 

[HoneyNut]

Quite simply, we'd be moving into a financial situation in which we will be constantly "spending down" our retirement savings and relying on: (1). We'd not outlive our savings; and (2) that the costs would not increase at higher rates that would much more quickly deplete out savings.

The business does no "do" MedicAid. If you run out of money, you have to leave.
That sounds like a rather risky financial situation that would NOT be under OUR control.

You can't take it with you, so it seems to me like it would be reasonable to use your money to give you the quality of life that you want.

But, it would sound a lot less scary if you had a few contingency plans for situations like the costs increasing too much (which considering insurance hikes, could very well happen) or just simply a backup plan if you don't like it after all.

Also, if you depleted your savings and one or both of you were still alive, would there be sufficient steady income (pensions, social security, annuities) to allow a decently comfortable last few years?

 

[dobielvr]

Too much of a risk....

 

[palides2021]

First of all, welcome to our forum, @WordsMyth43! You brought up a good question, and I remember a few threads here that have posed similar questions.

The fact that you are even asking this question should be a red flag for you. Yet, it doesn't hurt to know what all of your options are. If you go into this new situation with doubts about your longterm finances, then follow your gut instinct. I, for one, want to live in my home as long as I can until I can no longer live independently. I know of several people (e.g. my mother) who lived in her own home until she was 88. Then she moved in with my sister. She is now 91.

PS Are you a writer? Your name, phonetically, says Wordsmith