Senior Living Contracts: Get to Know Our Options

A move to a senior living community can be an exciting time. The prospect of a new home, new friends and amenities designed for this stage of your life are all appealing prospects. You may even think of the move as a way to reward yourself during your retirement years.

However, before you can settle into your new community, you have some decisions to make and research to do. With so many options in your area, you may be wondering how to evaluate senior living communities to find the best fit for you.

For most people, senior living contracts are high on the checklist for evaluating senior living options. Other factors may include the location, amenities offered and the community’s financial model (meaning whether it’s a for-profit or non-profit community). Sometimes, your decision simply comes down to the place that feels most like home.

Choosing Your Senior Living Lifestyle

Independent living is a type of senior living community that often appeals to healthy, active seniors who are looking forward to a flourishing lifestyle surrounded by friends and opportunities. As part of their monthly fees, residents have a place to live (such as an apartment or private estate home) and an array of services and amenities that support enriching, engaging and worry-free living.

What’s more, if the independent living neighborhood is part of a larger community that offers a continuum of care (like Westwood Senior Living), residents also have priority access to healthcare if future needs arise.

Once you determine that independent living is right for you, it’s important to understand there are different types of independent living communities, especially when it comes to fees and other financial considerations. Understanding how senior living contracts differ will help you figure out the best option for you.

Different Types of Senior Living Contracts

As you explore potential communities, you’re sure to encounter several different types of senior living contracts, each with a unique set of pros and cons. For example, some communities operate on a rental basis, while others require upfront entrance fees along with a monthly service fee. Some offer both rental and entrance fee contract options.

Communities requiring entrance fees often offer residents access to various levels of care as their needs change over time. The contracts may provide additional levels of care for the resident’s life, or they may outline specific provisions, such as a set duration for included care or predetermined discount rates.

The amount of the fee, sometimes called a “buy-in,” varies depending on factors such as the living space; apartments typically require less upfront than stand-alone houses. Some communities also allow a portion of the entrance fee to be refunded to the resident’s estate.

When you’re comparing contract options, it’s also important to be sure the financial terms and responsibilities are clearly defined. For example, what happens if you run out of money? Will you have to pay more if you need additional care? Who is responsible for your contract if you pass? Understanding these expectations will help you make a decision that aligns with your personal financial goals and plans.

Riverside Contract Types

As a non-profit community, Riverside Senior Life operates in the best interest of its residents, which includes the importance of preserving assets in retirement. That’s why residents have multiple contract options to choose from when they decide to make their home at Westwood Senior Living in Kankakee, Illinois:

Rental Agreement

This agreement requires no upfront entrance fee but comes at the highest monthly cost. Even so, this option can be appealing because it provides a place for you to live, along with all of the benefits of living in the community.

On the downside, a rental agreement doesn’t include healthcare, so if you need care in the future, it will be at current market rates. Your monthly rental expenses likely won’t qualify for the same tax benefits as some other senior living contracts, and with no fee invested, there’s nothing to return to your estate.

0% Refundable Entry Fee

If you’re daunted by the high cost of rental agreements, an entry fee contract may be more to your liking. With a 0% refundable entry fee agreement, you’re essentially buying down your monthly fees. This type of senior living contract may also qualify for tax deductions because you’re pre-paying against future healthcare.

The most notable disadvantage to this type of senior living contract is that the fees are non-refundable, so your investment won’t benefit your heirs.

50% Refundable Entry Fee

Often favored by long-term planners, this contract with a 50% refundable entry fee reduces your monthly expenses and provides for a return to your estate (contingent on an amortization schedule over a period of time after you move in). It also ensures you’ll have additional care if you need it in the future.

You benefit from a significantly lower monthly payment than if you were renting, while locking in a steady monthly fee that is ideal for long-term budgeting, as well as potential tax deductions. The catch is that this contract requires the largest upfront investment, so your ability to choose this option depends on your available assets.

Deciding What’s Right for You

With so many variables, you may still have trouble deciding exactly which option is the best. In that case, you may want to define your short- and long-term financial goals. Think about your current living expenses and how those expenses may change if you need more care in the future. Also consider your financial legacy and how your decision may affect your estate’s overall value.

Each senior living contract carries its own financial implications, which you’ll need to evaluate in the context of your current real estate equity (which could offset your entry fee), retirement savings and other assets.

Remember, this is not a decision to make lightly, nor is it one you’re obligated to make on your own. Your children and other relatives may have useful insight to help guide you, and the expertise of a financial advisor and legal counsel can help ensure your interests are protected.

Make Plans to Visit

Another important aspect of your independent living considerations is making plans to visit the communities that seem most likely to suit you. You can narrow the field by exploring websites and marketing brochures, but a tour is the only real way to know if you can envision calling the place home.

Going to your tour appointment with a list of questions, including a request for details about the senior living contracts available to you, will help you make the best-informed decision. Contact us by calling (815) 935-3273 to make plans to visit Westwood and take the first step toward an enriching and rewarding future.