How Will You Fund a Move to a Life Plan Community?

Every year, countless families and individuals face the same question: How will we afford to move to a lifecare retirement community? For many, moving into a community that offers everything from independent living to full care feels like the perfect next chapter. But turning that vision into a reality can feel daunting, especially when figuring out how to pay for it.

Whether you’re a son or daughter helping your parents or looking for yourself, it’s natural to wonder about the costs, available resources, and how to navigate the funding landscape without feeling overwhelmed. The good news is, with the right information and a little planning, the move to a lifecare retirement community can be far more manageable than you might think.

At Woodland Pond, our team can help you look at various practical strategies to help fund this transition. We’ll help you discover flexible financial tools, identify resources to explore, and offer a few insider tips on how to make the most of what’s available.

Understanding Lifecare Retirement Communities

Lifecare retirement communities are unique living arrangements that provide residents with various care options, from independent living to assisted living and skilled nursing care within the same community. This model allows residents to “age in place.”

One of the great things about these retirement communities is the concept of a “continuum of care.” This means you can enjoy the comfort of knowing that as your needs change, you can smoothly transition from independent living to more supportive care right within the same community. No matter what life throws your way, you won’t have to leave the place you call home.

Benefits of Lifecare Retirement Communities

Lifecare Retirement Communities go beyond basic housing; they offer many amenities and services to support wellness and quality of life. These benefits often include convenient on-site medical services, dining options, fitness centers, social events, and a variety of recreational activities. Plus, you’ll find helpful services like housekeeping and transportation. As your needs change, you can access more or less of these services.

Assessing Your Financial Situation

Funding a move to a lifecare retirement community starts with a close look at your current financial picture. Knowing where you stand financially will allow you to plan for the transition and manage ongoing expenses.

Evaluating Current Assets and Income Sources

Start by gathering all current income sources and assets, such as retirement savings, investments, Social Security benefits, pension plans, or rental property income. Consider how each income source will sustain you over the years and account for any adjustments based on age-related benefits, such as Social Security increases or adjustments in pension distributions.

Understanding Ongoing Expenses Associated with Moving

The cost of moving to a lifecare retirement community depends largely on location, level of care, and amenities. In general, you can expect an upfront entrance fee, which secures your spot within the community and covers some of the initial costs. You also have to pay monthly fees, which vary based on the level of care and the specific community. These costs can vary significantly from community to community. At a Lifecare Community like Woodland Pond, you are able to have a predictable monthly fee for life, even if you need a higher level of care in the future.

Creating a Budget for the Transition

Once you’ve assessed your income, assets, and anticipated expenses, the next step is to create a budget specifically for the move. This budget should detail the one-time costs (like entrance fees) and projected monthly expenses, including an emergency fund to account for any unexpected needs.

Funding Options

Funding can mean many things, from using personal savings to exploring financial assistance. Here are several potential sources that can help make the transition more financially manageable.

Personal Savings: A Foundation for Long-Term Stability

When funding a move to a lifecare retirement community, many aging residents turn to their personal savings accounts and investment accounts.

If you’re still working, consider putting aside extra income toward your funds. For retirees, reallocating a portion of discretionary spending toward future expenses can be a practical approach. Take a close look at high-interest savings accounts or conservative investment options that offer returns without high risk—these could help your savings grow as you prepare for the move.

Home Equity: Turning Property into an Asset for the Future

Home equity is among the most common funding sources for individuals moving to lifecare retirement communities. By converting property assets into available funds, you can access the capital needed to cover entrance fees, monthly charges, and other living expenses. This approach can be particularly advantageous if your home has appreciated significantly over time.

• Selling Your Home to Fund the Move: Selling a primary residence is often the most straightforward way to access home equity. Consider any costs associated with the sale, such as closing fees and relocation expenses, and ensure that proceeds from the sale will comfortably cover community fees.
• Reverse Mortgages and Home Equity Loans: For those who wish to retain ownership of their home, a reverse mortgage or home equity loan may be a good option. A reverse mortgage allows homeowners aged 62 and older to access a portion of their home’s equity without needing to sell, while a home equity loan provides a lump sum to be used.

Long-Term Care Insurance

Long-term care insurance (LTCI) is another valuable resource for seniors planning for a move to a lifecare retirement community. Unlike regular health insurance, LTCI covers a range of services related to personal and medical care. This makes it perfect for anyone who needs assisted or skilled nursing care.

LTCI typically covers services that assist with daily activities, such as dressing, bathing, and eating, as well as specialized care for chronic conditions. Many policies extend to care within these communities, covering costs associated with assisted living and skilled nursing care.

Tax Deductions

Many retirees, and even some CCRC residents, are not aware that they are likely entitled to a deduction for medical expenses as well as a portion of their Lifecare fee, Entrance Fee and/or monthly services fees paid to their community. At Woodland Pond, we advise our residents on a yearly basis to take advantage of their tax deductions and provide a breakdown of their contract types and the amounts of deductions they should be claiming.

Some key items to consider as you review the tax deductions with your financial advisor. CCRC residents do not need to receive healthcare services to take the deduction. It is often available to residents living independently. In the case of refundable entry fees, deductions should only be taken on non-refundable portions. If a resident deducts any portion of the entry fee that is eventually refunded, then the refund will likely be taxable when paid. If adult children pay some or the entire entrance fee, they may receive a deduction. However, other factors are involved in this determination, including the amount of total financial support provided for their parents.

Seeking Professional Guidance

Funding a move to a continuing care community isn’t easy. That’s why families and elderly individuals should seek professional guidance. From financial advisors to elder law attorneys, working with experts ensures that you have a solid plan in place.

• Financial Advisors. Working with a financial advisor helps you make long-term plans and can uncover tax benefits, investment strategies, or other financial tools that can alleviate moving costs.
• Attorneys & Law Firms. Elder law attorneys can provide guidance on Medicaid eligibility, estate planning, and understanding contractual terms with lifecare retirement communities.

Resources for Finding Qualified Professionals

When looking for financial advisors, organizations like the National Association of Personal Financial Advisors (NAPFA) provide directories of qualified, fee-only advisors. To find elder law attorneys, the National Academy of Elder Law Attorneys (NAELA) offers resources to locate attorneys specializing in senior care planning.

The Team at Woodland Pond Can Help

Moving to a lifecare retirement community can be a rewarding experience, but it requires careful financial preparation. By exploring personal savings, leveraging home equity, understanding available assistance programs, and seeking professional guidance, seniors and families can create a financial plan that supports a seamless transition.

At Woodland Pond, we’ll meet with you to discuss lifecare retirement communities and funding options that might be available to you. Reach out to us today!