Finding The Right 'All-in-One' Retirement Community

When I talk to people who are retired--or about to retire--they generally have one major concern: Should I "age in place" (that is, stay in their own home), or should I move to a specialized community that can accommodate my changing healthcare needs?

Aging in place works if you have a lot of support, ranging from family caregiving to home health and homemaking services. But for many Americans, moving to an "all-in-one" community may make more sense. Such communities offer seniors a wide range of services, often in a resortlike setting.

Such "life plan" or "continuing care" communities allow retirees to move from independent living to assisted living and memory care in one complex. This new generation of life plan communities are far from what the traditional dreary long-term care facilities may have been. Today's communities offer a complete slate of activities and amenities like restaurants, spas, and fitness services.

At present, there are more than 2,000 life plan communities in North America, with more being built every year, according to Leading Age, a nonprofit education and advocacy group. Some of the communities are owned by religious groups, while a growing number of for-profit companies are building communities.

By stressing wellness and an active lifestyle, life plan communities are geared toward retirees who want to maintain their health and social activities. The newest generation of life plan communities can be luxurious--and costly. They are clearly not for retirees with limited resources, since there are layers of fees for an array of services.

What Do Life Plan Communities Provide? The traditional model of long-term care has been to offer services in separate facilities. The most common developments are "senior living" and retirement communities largely designed for mobile, independent retirees that range from gated, golf course communities to urban apartment buildings. The next level is assisted living, which provides in-house assistance, such as cleaning and meals. The top tier includes skilled nursing or memory care, which is for people with dementia or Alzheimer's who can't safely live by themselves.

Life plan communities, in contrast, are comprehensive all-in-one-place packages that offer independent living to skilled nursing in one complex. And in recent years, these communities have layered on multiple amenities to attract retirees who want the deluxe "all-in-one" setting. I've seen communities that offer plush "villas" to penthouse apartments. Most of these high-end communities stress the "active aging" concept, where residents are encouraged to engage in a number of activities ranging from crafts to regular holiday parties. One high-end, million-square-foot community I visited said it offered residents some 500 activities a month.

How to Price Community Services There are three basic pricing models for life plan communities. The least-expensive plan is "fee for service," which means you pay for what you need on an a la carte basis, from just renting an independent living unit to skilled nursing care. A "modified care contract" includes in a monthly fee covering some basic services for a set period of time, but the offerings will go up in price over time. An "extended" or "life care" contract includes an array of services in one package, but it's the most expensive.

Depending upon the community, the more amenities offered, the higher the entrance or enrollment fee, which ranges from a few thousand dollars to $1 million; the average enrollment fee is around $250,000. Keep in mind that there may be additional monthly fees ranging from $3,000 to $5,000 for various levels of care and maintenance.

You can also choose to rent or buy--depending upon the community--- but your ability to obtain a refund varies. According to Alex Joyce, a retirement planner and CEO of ReJoyce Financial in Carmel, Indiana, take a hard look at the financial obligation of a Life Plan Community before considering one.

"As long as you have the money, it's OK," says Joyce. "But I wouldn't recommend it for people with less than $500,000 in assets. It's easier to have this conversation with people with seven-figure portfolios."

Joyce, who has counseled clients on evaluating these communities, says you also need to be aware of hidden fees for services like a concierge, transportation, or entertainment. Amenities such as swimming pools, art studios, and fitness centers can add to the monthly cost. Keep in mind that buying into a life plan community is far more than a real estate decision. You need to ask yourself if the services offered will be important to you now and in the future. While it may be more convenient to have them offered in one "boutique" setting, you pay for what you get. And nonmedical services aren't covered by Medicare or Medicaid in these communities.

Things to Consider For most families, jointly choosing a continuing care community can be a difficult decision. Here are some key questions to ask.

• Will it be accessible to extended family who want to visit?
• Is it a good social fit for those who may not be comfortable with an unfamiliar group of people in a new setting?
• Will the transition from independent to assisted living be an easy one within one complex?
• What long-term care services are offered, and how much will they cost?
• What happens if the resident runs out of money? Will he be able to live there on Medicaid? Many communities prefer residents paying out of pocket.
• How long will your resources last under several scenarios of care, from independent living to memory care?
• Will the community provide or allow outside additional services, such as hospice care?

How to Choose The best way to tell if a life plan community will be a good fit is to take a tour and run the numbers. When I surveyed one luxurious community for my father, I marveled at the conference hall, theater, multiple restaurants, spa, and elegant furnishings. Getting past the initial impression and being practical is important, though.

How important will these services be over months and years? What if you can't drive anymore? Will the community provide transportation to shopping or recreation (most do)?

Also ask about staff training, the ratio of staff to residents, and how the facility is maintained. Does the staff go through criminal background checks? What kind of training does the memory care staff have? How does the company or organization running the community maintain and improve quality service?

If you find a place you like, have the contract thoroughly reviewed by a lawyer, accountant, or certified financial planner. They should be able to estimate your "all-in" monthly fees and upfront commitment, as well as your refund options. And those refund options are important: One retiree I knew moved into a small apartment within a life plan community, but found it depressing, which prompted her to find another community.

As with any move, you need to ask yourself whether could you see yourself living there over a long period of time, even when your health declines. When it comes down to a decision, look at whether the move makes sense versus staying in your present home and bringing in home care services as needed. You may find that you'd be better off staying where you are.

John F. Wasik is a freelance columnist for Morningstar.com and author of 17 books, including Lightning Strikes: Timeless Lessons in Creativity from the Life and Work of Nikola Tesla. The views expressed in this article do not necessarily reflect the views of Morningstar.com.