Understanding the Cost of Senior Living
There are a lot of factors that go into the decision to choose a senior living community. Naturally, financing that choice is a significant one. Senior living costs can be overwhelming and confusing, especially if it’s your first time exploring retirement options. Here’s a quick guide to the different types of fees you can expect, and how you can compare costs to make a smart decision.
Types of Senior Living Community Fees
Entrance Fees. At most communities, you’ll have some kind of upfront fee. For independent living communities that also offer different levels of care, the entrance fee can be higher than you might expect at first. That’s because this fee gives you access to different types of care, such as assisted living and memory care. This care is usually on campus and typically offered at prices well below market rates. It’s a way of putting a plan in place for future care at more predictable costs.
Monthly Fees. These fees cover everything from maintenance and meals to entertainment, classes, fitness programs, social events, and use of all the campus amenities. Many people find that when they compare the monthly cost of staying in their current residence, community monthly fees are often similar – or even less.
How to Compare the Costs of Senior Living
If you simply look at the price sheets of different senior living communities, you might not get the complete picture. It’s important to know if you’re comparing apples to apples – or not.
Rental community pricing can look appealing at first. But not all rental communities provide the same types of services, amenities, programming, and health services that an active independent living community with a continuum of care does.
Here are some questions to ask about entrance fees and monthly fees:
- What levels of care are offered?
- Does the entrance fee give me priority access to on-site care?
- What percentage of the entrance fee is refundable to me or my estate?
- How does this contract impact my costs of future care?
- Will my monthly fees go up if I need a higher level of care?
- Will I pay full market rates?
- Will I pay a discounted rate?
- Will I get a certain number of days free in the health center?
- Will I pay only for the care I use?
- What maintenance and/or housekeeping services does my monthly fee cover?
- What types of programs and activities are covered in my monthly fee?
- What is not covered in the monthly fee?
Weighing Cost and Value
Senior living expert Brad Breeding encourages prospective residents to look at more than the initial price tag. He says it’s important to look at not just the cost for today, but the projected lifetime senior living costs.
“When you begin to run the long-term projections taking into account various hypothetical assumptions — including things like years of care that will be needed in the future, growth rates, inflation, time frame, and more — you’ll find there’s a break-even point somewhere along the way,” he writes.
If you assume you’ll never need care, a rental contract seems more appealing from a lifetime cost perspective. But, according to the Department of Health and Human Services, 70% of people aged 65+ will need some form of long-term care. So it becomes more important to factor in potential health care costs. With discounted rates and entrance fee refundability options, Breeding says the break-even point may come sooner than you think, especially for couples. Which means an entrance fee community can very well end up being a smarter financial investment.
Aberdeen Ridge is bringing a new kind of senior independent living to Colorado Springs – and we’d love for you to learn more about it. We’re building a community for active seniors who want to get the most out of life right now, and have a plan in place for future care if they need it. If you’d like to know more about Aberdeen Ridge and our entrance fee model, please schedule an appointment. We’re happy to discuss the costs and how you can make a smart financial decision.