Retirement Homes for Less – Wall Street Journal – 05/12/12




The Wall Street Journal

Weekend Investor – Family Value – May 12, 2012

Retirement Homes for Less

By Kelly Greene

Most people wouldn’t dream of buying a house or a car without negotiating the price. Yet many families don’t realize they can bargain for what can be an even bigger-ticket item: a retirement residence.

Dickering can pay off. “Active adult” developments often charge steep monthly fees for amenities, and continuing-care retirement communities, or CCRCs, generally require a hefty deposit, along with monthly fees for care ranging from independent living to round-the-clock nursing.

The average entrance fee for a CCRC unit is $259,000, according to the National Investment Center for the Seniors Housing and Care Industry, a research and data group in Annapolis, Md.

The last thing you want, after all, is a retirement community that retires—abruptly—on you.

Comments May 12, 2012

Imagine after decades of savings you are ready to make one of the biggest investment decisions of your life. After thorough research you decide to invest in the seventh largest company on the Fortune 500 list, Enron. Enron subsequently files for bankruptcy in the wake of management fraud and scandal.

How does this story relate to choosing a retirement home? Like investments, don’t put all you eggs in one basket. Like investments, nothing stays the same. And, like investments there is always the risk that a good company can be destroyed by management. Unlike investments that can be sold with the click of mouse at little to no cost and for any reason (e.g. if the company changes or your situation changes), changing continuing care retirement communities (CCRCs) can be a lot more complicated.

Most contracts you sign with CCRCs do not allow you to simply click a mouse at little to no cost and leave for any reason. Even if the quality of care you receive deteriorates or many of the amenities previously offered are discontinued, getting your deposit back may not be possible.

In their July 21, 2010 Continuing Care Retirement Communities: Risks to Seniors Summary of Committee Investigation, the U.S. Senate Special Committee on Aging states, “The CCRC model is particularly vulnerable during economic downturns, as stagnant real estate markets drive down occupancy levels in independent living units, which serve as CCRCs’ primary source of profit. Financial difficulties for CCRC providers could place a consumer’s investment at risk and raise their monthly CCRC expenditures.” In addition, according to the American Bankruptcy Institute Journal, “the CCRC industry is particularly vulnerable to insolvency, and several CCRCs have failed, primarily as a result of poor financial planning.”

Seriously evaluate purchasing a long term care insurance policy. With a long term care insurance policy, you can choose where your retirement home will be now and change it as many times as you need or want to change it. Most policies will pay for care in your own home, an assisted living facility or a nursing facility. If you are unhappy with the care provider coming to your home simply replace them. If you are receiving care in an assisted living facility or nursing facility and choose to leave due to changes in their fees, quality of care you are receiving or you just want to move closer to your family, you can simply leave without penalty.

Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group

Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies.  He can be contacted at or 908-464-3060.

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