Retirement Homes for Less - Aaron Skloff, AIF, CFA, MBA - CEO Skloff Financial Group
May 12, 2012 – WEEKEND INVESTOR – FAMILY VALUE By Kelly Greene Retirement Homes for LessMost people wouldnt dream of buying a house or a car without negotiating the price. Yet manyfamilies dont realize they can bargain for what can be an even bigger-ticket item: a retirementresidence.Dickering can pay off. "Active adult" developments often charge steep monthly fees foramenities, and continuing-care retirement communities, or CCRCs, generally require a heftydeposit, along with monthly fees for care ranging from independent living to round-the-clocknursing.The average entrance fee for a CCRC unit is $259,000, according to the National InvestmentCenter 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, 2012Imagine after decades of savings you are ready to make one of the biggest investment decisionsof your life. After thorough research you decide to invest in the seventh largest company on theFortune 500 list, Enron. Enron subsequently files for bankruptcy in the wake management fraudand scandal.How does this story relate to choosing a retirement home? Like investments, don’t put all youeggs in one basket. Like investments, nothing stays the same. And, like investments there isalways the risk that a good company can be destroyed by management. Unlike investments thatcan 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 nocost and leave for any reason. Even if the quality of care you receive deteriorates or many of theamenities 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 ofCommittee Investigation, the U.S. Senate Special Committee on Aging states, “The CCRCmodel is particularly vulnerable during economic downturns, as stagnant real estate marketsdrive down occupancy levels in independent living units, which serve as CCRCs’ primarysource of profit. Financial difficulties for CCRC providers could place a consumer’s investmentat risk and raise their monthly CCRC expenditures.” In addition, according to the AmericanBankruptcy Institute Journal, “the CCRC industry is particularly vulnerable to insolvency, andseveral CCRCs have failed, primarily as a result of poor financial planning.”Seriously evaluate purchasing a long term care insurance policy. With a long term careinsurance policy, you can choose where your retirement home will be now and change it asmany 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 comingto your home simply replace them. If you are receiving care in an assisted living facility ornursing facility and choose to leave due to changes in their fees, quality of care you arereceiving or you just want to move closer to your family, you can simply leave without penalty.Aaron Skloff, AIF, CFA, MBACEO – Skloff Financial Groupwww.skloff.com/services-ltci.htmAaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA),Master of Business Administration (MBA), is the Chief Executive Officer of Skloff FinancialGroup, a NJ based Registered Investment Advisory firm. The firm specializes in financialplanning and investment management services for high net worth individuals and benefits forsmall to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.