Everyone wants to hit that milestone where you can hang up your work boots and retire from the daily grind. The problem is that many Americans fail to adequately prepare for this pivotal life change.
Recent data suggests that nearly 35% of people have little or no money earmarked specifically for the purposes of retirement1. Yet, according to the U.S. Census Bureau, by 2034 there will be roughly 77 million people 65 years and older2.
What is equally shocking is how the recent pandemic ignited a new wave of workers nearing retirement age to call it quits early, despite the fact that only a little over half of households with workers between the ages of 55-64 have retirement accounts3.
What’s also becoming an even larger, systemic issue is that most Americans have no understanding of where they are going to live or what their housing options are once, they retire.
There is a lot of misinformation about senior living. However, despite the many misconceptions that your friends or family might have regarding senior housing, the truth is that there are many popular retirement housing solutions available.
Whether you want to retain a certain level of independence or simply require additional resources in support of your living care, knowing your retirement housing options is the first of many steps to planning a more enjoyable retirement.
While there are multiple types of retirement communities and senior living options, here are five of the most popular retirement housing options worth exploring.
Aging In Place
You have a lot of choices in terms of where you want to live and what amenities you want (or need) to support your future lifestyle. Aging in place really embraces this sentiment, referring to a person living and aging in a residence of choice for as long as they can.
Some may consider aging in place as simply growing old in your family home, while others may consider aging in place as enjoying a new beachfront condo in the Florida Keys. Either option would work with respect to aging in place because the bottom line is that you choose the residence you prefer.
Advantages of Aging in Place
If it’s not broken, don’t fix it. It’s reasonable to expect to continue living in your own home that you may have lived in for years to also live out your days in retirement. In fact, one of the best parts about aging in place is that you are already familiar with your housing situation.
You also don’t have to change your routine, although you may need to plan for future accommodations as your living situation changes. For example, there might be cases where you need to remodel to make accessibility to the home easier.
Another benefit to aging in place is that it may grant you more opportunity to spend time with family and loved ones. Maintaining relationships can be crucial to quality of life. Aging in place can offer more control in fostering core relationships.
Challenges to Aging in Place
One of the biggest arguments against aging in place is that at some point problems always arise that will force you into a different housing situation. But the truth is that if you choose to age in place, you can plan for situational changes.
If aging in place sounds like the best retirement housing option for you, a good approach is to start out by creating a plan for when things start to impact the quality of life that you are already used to. This includes reviewing the financial and economic implications for living out your retirement comfortably.
This also means planning for inevitable physical, mental, and emotional changes associated with aging. Specially, focus on how changes might impact the activities of your daily life. A couple of common examples include:
- Mobility to and from your home without issue
- Feasibility of private transportation
- General upkeep and maintenance of your dwelling
- Ability to perform self-care and necessary household chores
Independent Living Retirement Communities
If you decided that aging in place might not be suited for your retirement housing plan, an independent living retirement community is probably the next best alternative. One of the reasons why independent living retirement communities are so popular is because they can still provide a ton of freedom while also making your living situation much more manageable.
There are a variety of types of independent living retirement communities which means you have a lot of flexibility when it comes to choosing how you want to live. However, one thing many of these facilities have in common is a neighborhood or community of older adults that have similar needs and interests.
It’s also important to understand that independent living is very different from assisted living. Many people confuse the two as being one in the same, but in reality, assisted living is geared toward those that need additional accommodations and who might not be able to live on their own without help.
Traditional Retirement Homes and Communities
When most people think of senior housing, they think of a traditional retirement home. Retirement homes are advantageous because they offer a variety of property types, such as apartments, condominiums, townhomes, or even cottages, but are often located in a senior community with other active retirees4.
Like other community neighborhoods, you may have to pay monthly dues or membership fees but have access to additional amenities that you might not have when aging in place such as on-site restaurants, recreational facilities, and even housekeeping4.
Senior Apartments or Congregate Care Housing
Similar to a retirement home, senior apartments are apartments or condominiums within a retirement community and specifically earmarked for seniors (usually ages 55 to 62 and older)4. The difference is that the community may be more restrictive in terms of the types of properties to choose from.
Unlike a normal retirement home which may have a larger residence with a larger range of standard housing features, senior apartments are often more limited in scope4. They are often a bit less spacious, although most have a kitchen, bath, and bedroom4.
Residents also often still get access to additional amenities including housekeeping, shuttle service, and community dining. If you are looking to live independently but on a smaller budget, congregate care housing may be a great alternative to a traditional retirement home or community4.
Subsidized & Low-Income Housing
If you are living on a limited fixed income, you may qualify for subsidized or low-income housing. Yet another form of independent living, this type of housing is even more affordable than many private senior apartments but with similar amenities.
Not everyone can qualify for subsidized and low-income housing. The reason why this type of retirement housing is so much more affordable is that the U.S. The Department of Housing and Urban Development (HUD) subsidizes these complexes.
Although the subsidies make it much more affordable for residents, you must meet certain income restrictions in order to live in one of these facilities.
Assisted Living Retirement Communities
According to the American Seniors Housing Association, nearly 1 in 5 U.S. adults ages 85 and older say they need help or currently receive help with activities of daily life5. If you need additional accommodations or assistance, choosing an assisted living retirement community may be your best retirement housing option.
Some of the more common daily activities that assisted living retirement communities help you with include bathing, dressing, eating, and walking.
Assisted living retirement communities are created to provide specialized care in a residential setting for those that require support to help maintain their quality of life. Not only may healthcare services be included, but social activities are also often available.
In the U.S. alone, there are nearly 29,000 assisted living retirement communities meaning you have a lot of choices for where you want to live5. Similarly, a 2019 Quality of Life in Assisted Living Survey found that 87% of residents were satisfied with the overall experience of their community5.
Assisted Living vs Nursing Homes
There are many differences between assisted living retirement communities and nursing homes. The biggest difference is that assisted living facilities are not providing full-time care by specially trained medical staff. Rather, assisted living provides supportive care which allows you to still retain a degree of independence.
Because assisted living doesn’t require the same resources as full-time care, it’s usually much more affordable than a nursing home. However, one implication is that assisted living retirement communities are not usually covered by Medicare or Medicaid5.
If you choose an assisted living retirement community as your retirement housing option, be prepared to pay for this type of care out of pocket or through private insurance. While you may qualify for income-based relief if you are a low-income resident, this can vary based on where you live.
Continuing Care Retirement Communities (CCRCs)
Continuing care retirement communities are where independent living and assisted living sort of intertwine. Think of this retirement housing option as a hybrid model that is often championed for being extremely flexible.
For example, if you are healthy now but anticipate arising health issues later down the line, a continuing care retirement community offers a spectrum of independence given the number of accommodations you need.
You can elect to receive little or even full care depending on your circumstances. If, however, you find that you need a higher level of help with daily activities, you can always make the decision to be transferred to the part of the community that mirrors assisted living and offers full-time care6.
This makes choosing a continuing care retirement community a great way to plan for both your present and future housing needs.
Difference in Services and Care
Unlike assisted living retirement communities, continuing care retirement communities offer varying levels of care depending on how your needs change and develop over time. Assisted living only offers one level of care: full-time care or services7.
What you will typically receive in an assisted living facility is assistance with bathing, dressing, and eating7. While you may not receive full medical care, some processes, including the distribution of medication and certain therapies, are included and supervised7.
In a continuing care facility, expect to receive professional health services, commercial services, and community services all on a sliding scale.
Examples of professional health services include skilled nursing care, physical and occupational therapies, and even on-site dentistry7. Commercial and community services might include dining service, transportation, housing keeping, golfing, crafting, and private gardening7.
While the types of services depend on the community you select, continuing care retirement communities are packed full of a wide range of amenities to take advantage of.
Compared to other retirement housing options, nursing homes provide the most comprehensive level of full-time care. Sometimes referred to as skilled nursing facilities, these communities skew their focus toward services centered more around medical care than others.
A general misconception about nursing homes is that once you visit one, you are stuck there. But according to the National Institute on Aging, some seniors visit a nursing home to simply recover after a prolonged hospitalization. After a short period of time, they can go home6.
However, it is important to understand that the majority of residents living in nursing homes agree to live there permanently. This is because some people require round-the-clock medical care over what an assisted living community might be able to provide to help maintain their quality of life.
Covering the Cost of a Nursing Home
If you choose a nursing home as your retirement housing option, there are many ways you can pay for your care. The first way is to use any personal savings that you might have. If you have a life insurance policy, some providers have provisions that let you access your death benefit early to pay for long-term care costs.
Another way to cover the costs of a nursing home is if you have a specific long-term care insurance policy. While your coverage can vary depending on the type of policy and your carrier, some fully cover nursing home care.
Lastly, many retirees rely on Medicaid to pay for medical costs associated with nursing home housing8. Even if you pay out-of-pocket or utilize long term care insurance to cover the costs of your care, as you deplete these resources you can then use Medicaid as a safety net in case the well runs dry.
According to the American Medical Association, health spending in the U.S. in 2019 reached approximately $3.8 trillion, growing by almost 5% from the previous year9. Knowing that, it doesn’t seem likely the cost for long term care will decline anytime soon.
Making the decision to retire is a big milestone which takes a lot of forethought and planning. Not only do you want to make sure that you can sufficiently finance your retirement, but you also need to choose what retirement housing option best suits your needs.
When starting the planning process, it’s a good idea to identify your current housing needs. However, it may also be advantageous to forecast where you see yourself in a few years and what accommodations you might need to retain a healthy quality of life.
Specifically, figuring out just how much independence or assistance you want, or need will depend on your unique situation. Some people choose to live out their days aging in place in the comfort of their own home while others choose to move to more retirement-centric communities.
In fact, several retirement housing options offer full independence while others offer a range of assisted living from minor services to full care.
If you want more freedom as well as access to a full suite of amenities, you cannot go wrong in choosing an independent living retirement community. If you need more assistance with your daily living activities, assisted living retirement communities may be a better solution.
Alternatives, choose the best of both worlds by going with a continuing care retirement community as your retirement housing option. Continuing care retirement communities offer flexibility without sacrificing important amenities that you may come to value. Further, you get a spectrum of care tailored to your specific needs as you age throughout retirement.
Nursing homes are one of the last options, mostly for those who require round-the-clock care. It’s important not to mistake other retirement housing options for a nursing home.
Whatever retirement housing option you choose, it’s always important to create a fully comprehensive plan of action before making the leap into retirement. Once you know how you will finance retirement and where you want to live, the next steps are simple: relax and enjoy your remaining years.
1 Backman, M. (2020, February 19). You’ll Be Shocked by How Many Americans Have No Retirement Savings at All. Retrieved August 9, 2021, from https://www.fool.com/retirement/2020/02/19/youll-be-shocked-by-how-many-americans-have-no-ret.aspx
2 Older People Projected to Outnumber Children for First Time in U.S. History (CB18-41). (2018, March 13). Retrieved August 9, 2021, from United States Census Bureau website: https://www.census.gov/newsroom/press-releases/2018/cb18-41-population-projections.html
3 Dore, K. (2021, May 09). The pandemic drove these Americans into early retirement. What to know before making the leap. Retrieved August 9, 2021, from https://www.cnbc.com/2021/05/09/the-pandemic-drove-these-americans-into-early-retirement.html
4Weber, M. (2021, July 16). Independent Living for Seniors. Retrieved August 9, 2021, from https://www.helpguide.org/articles/senior-housing/independent-living-for-seniors.htm
5 American Seniors Housing Association. (2021, February 09). What is Assisted Living? – Assisted Living Defined: Where You Live Matters. Retrieved August 9, 2021, from https://www.whereyoulivematters.org/assisted-living-defined/
6 National Institute on Aging. (2017, May 01). Residential Facilities, Assisted Living, and Nursing Homes. Retrieved August 9, 2021, from https://www.nia.nih.gov/health/residential-facilities-assisted-living-and-nursing-homes
7 Seniors Guide Staff. (2020, May 21). The Difference Between a CCRC and Assisted Living. Retrieved August 9, 2021, from https://www.seniorsguide.com/active-adult-communities/the-difference-between-a-ccrc-and-assisted-living/
8 Medicare.gov. (n.d.). How can I pay for nursing home care? Retrieved August 9, 2021, from https://www.medicare.gov/what-medicare-covers/what-part-a-covers/how-can-i-pay-for-nursing-home-care
9 American Medical Association. (n.d.). Trends in health care spending. Retrieved August 9, 2021, from https://www.ama-assn.org/about/research/trends-health-care-spending