Many middle- and upper-income older adults are better positioned to live in a premier retirement community than they realize, says Chip Workman, director and senior wealth advisor at Mercer Advisors in Montgomery, Ohio.

It’s true that Workman’s clients tend to be better-off than most. He calls them “millionaire-next-door-types” who typically have investable assets between $1 million and $10 million. But even people with those assets tend to fret more than is necessary and overly stress about their financial future.

More affordable than many realize

“So many of us walk around with financial stress of one kind or another,” Workman said recently. “Sometimes it's well placed, unfortunately, but a lot of times it's not.”

Education – either through talking with somebody at a continuing care retirement community (CCRC), or a financial advisor like Workman – can go a long way toward easing a person’s concerns and giving them a better idea of what they can afford. CCRCs are retirement communities that offer a continuum of care for residents, from independent-living to increased levels of assistance as their healthcare needs change.

Once people start realizing the ways they can make use of their home equity, and consider some of the spending they no longer would face after moving to a retirement campus, “Oftentimes – at least with the folks we are fortunate enough to work with – it's much more affordable than they think.”

Instead, many people often get stuck thinking, “All I hear is that these places are unbelievably expensive, and how can I ever possibly afford that?”

Chip Workman of Mercer Advisors in Montgomery, Ohio.

Home equity often is key

When older clients have interest, Workman talks a lot with them about CCRCs. He discusses long-term-care insurance, which may or may not be a good idea, depending on several factors.

Typically, when clients are considering moving into CCRCs, they’re going to sell their home, and its equity often is used as payment toward the community’s entry fee.

Using round numbers, a couple may sell a house they own outright for $500,000, and the community they’re looking at may have an entry fee of $200,000.

The proceeds from the home sale typically would go toward the entry fee, and he also would look at what the remaining $300,000 could do with short-term or medium-term growth “to cover the monthly costs for several years,” he said. “Oftentimes, that's a pretty key piece to making the math work on that kind of a move.”

Related Blog: Retirement Planning 101: What is an Entrance Fee?

There also are monthly fees to be paid to the CCRC, but other costs associated with owning a home disappear for someone who moves into a retirement community. Those expenses vary, depending on the campus.

Typically, “we can typically show clients what kind of spending they’ve done in the recent past,” he said. “And then we work through, ‘OK, what expenses would continue to exist, and which ones would not?’”

Some costs vanish!

Typically, “we can typically show clients what kind of spending they’ve done in the recent past,” Workman said. “And then we work through, ‘OK, what expenses would continue to exist, and which ones would not?’”

Anything from a homeowner’s current utility- or property-tax bills no longer will be something they pay.

Depending on the retirement community, other expenses that no longer apply include meals, utilities, cable-television costs, health clubs, cost of their house’s alarm system, and the landscapers, among other things.

“When you start to peel those expenses off, the monthly fees often look more attractive than what they're paying to live in their home,” Workman said.

Benefits of a fiduciary advisor

At Mercer Advisors, Workman works as a fiduciary financial advisor, which means he must act in the client’s best interests. Advisors who are not fiduciaries may be able to recommend investments that pay them a commission.

Non-fiduciary advisors can face conflicts-of-interests between the needs of their clients and their own financial benefits.

Pro Tip 1: Plan for your future before a disaster

One key piece of advice Workman offers is to get to know retirement communities in your area sooner rather than later.

The worst time for older adults and their families to have to make a significant decision about their future is the day of, or days after, a health crisis.

“That tends to be very expensive,” he said. “It’s unbelievably stressful – on the whole family, oftentimes. You don't know what you want, you don't know what's available.”

Also, in many retirement communities, “the ideal situation may not be available right away, or at all,” Workman said. “Doing that planning in advance can just make a huge difference.”

Pro Tip 2: Don’t dismiss retirement campuses without exploring them

Another key suggestion he has is not to dismiss the possibility of living in a retirement community.

People shouldn’t automatically cling to the desire to remain in their house without knowing the alternatives.

“I think you shouldn’t make that decision absent having some real information – visiting a few communities, seeing what's out there,” he said. “If you do that, and you say, ‘No, I still can't imagine myself there, I want to say home,’ fair enough. But if you're not looking at those options, you may be missing out on something.”

“Obviously, I see every day in my work with ERS (Episcopal Retirement Services, the non-profit organization that operates the Deupree House and Marjorie P. Lee retirement campuses in Cincinnati’s Hyde Park neighborhood), people really thriving in their communities,” he said.

Workman is a member of the ERS Board of Directors, and also on the ERS Foundation Board of Directors.

Related Blog: The Proven Benefits of Living in a Continuing Care Retirement Community

Aside from the continuum of care that CCRCs offer, another advantage of living in a retirement community is the proximity to neighbors, and potential friends. For people in their upper-80s or 90s, it’s difficult to walk out of their suburban homes to see those who live next door.

But his 97-year-old grandmother lives in a retirement community, and for her “to walk next door at her community is pretty simple. She’s able to still do some activities. And she likes a wine tasting here and there,” he said.

Do you have enough assets to move into a retirement community?

Whether someone has sufficient assets to move into a retirement community is a key question for many, said Karen Immell, community relations director at ERS’ Deupree House.

Aside from going through an evaluation process with a financial advisor, another way to learn whether you have sufficient assets to move into a CCRC or other retirement community is to file an entrance application for that community. After that, accountants look at the applicants’ ages, their finances and income. 

Here are the people to contact to begin the application process at ERS’ three premier-living retirement campuses:

• At Deupree House, Karen Immell, kimmell@erslife.org or 513-561-4200;
• At Marjorie P. Lee, Community Relations Director Jennifer Schlotbom, jschlotbom@erslife.org or 513-533-5000.
• At Episcopal Church Home in Louisville, Ky., Elizabeth Pace, epace@erslife.org or 502-736-8043.