Retirement Communities Go Belly Up
I am wary of such retirement plans, especially after what happened to my aunt and uncle.
Back in the 1980s, Aunt E and Uncle J liquidated all of their assets and put the money into a retirement community. That community surely served my uncle well when he suffered from Alzheimer's Disease, and he moved into assisted living and, later, the nursing home. In the case of my aunt, however, she continued to live independently and outlived the time allowed to continue to live in the community (some fifteen years allowed, if I recall correctly).
In any case, this article about the insecurity of retirement communities, some very expensive ones, appeared in the November 1, 2009 edition of the Washington Post. Excerpt:
Is your retirement secure? For some people who thought they had taken care of everything, the answer may be riding on another question: Is your retirement community secure?Read the rest HERE.
Anne Bradt, 83, said she and fellow residents thought they had bought themselves worry-free retirements when they put down hundreds of thousands of dollars -- upwards of $900,000 each -- to move into Sherburne Commons in Nantucket, Mass. Then, a year ago, the nonprofit company that runs the place sought bankruptcy protection. Food service was cut to one meal a day. Activities such as dance and music disappeared, along with the activities director and other members of the staff. Residents could still pull a cord if they needed emergency help in the shower, but they would have to pay extra for the lifeline, and the person answering the call would no longer be on the premises.
Bradt's life became caught up in a complex legal proceeding, with her entire deposit at risk.
"It's been one year of absolute hell," Bradt said. "It's taken its toll physically and mentally."
The recession and the real estate crisis have raised new concerns for people who paid hundreds of thousands of dollars, as much money as it might take to buy a home, just to enter retirement communities. The deposits typically earn seniors the privilege of moving in; they do not confer any ownership in the real estate, and they are in addition to monthly fees that can total thousands of dollars.
In theory, residents can reclaim the money when they move out, or their heirs can recoup it when they die. But the model can break down when the communities' economic assumptions prove too optimistic.
In Northwest Washington, some residents of Ingleside at Rock Creek thought the deposits they paid years ago under "life care contracts" limited the fees they would have to pay for the rest of their lives, according to family members. They were upset when, under financial stress, Ingleside introduced new "ancillary" fees in January for items such as incontinence care, protein supplements and injections.
Ingleside's trouble was that the cost of caring for its residents was outstripping the fees they were paying. "There was a business model here that wasn't sustainable," said Richard Woodard, chief operating officer...
Last month, when I was inquiring at the nursing home where Mr. AOW is staying right now as to how to get some home-needs modifications done before his release to come home, the girl in the office handed me a magazine listing all of the retirement communities in the D.C. area. I have to wonder just how many of those communities are financially secure.
What happens to the residents of financially troubled retirement communities if services continue to be cut and the facilities actually close or become too expensive to afford?