Defining Home: Housing Alternatives for Elders

As a big proponent of “aging at home,” I have worked with many families, including my own, over the wrestling of options when “home” needs to be redefined for aging parents and relatives. Sometimes “staying at home” is not viable, even when care it taken to build in all the modifications, supports and assistance necessary to consider it seriously. And, as in the case of a dear friend, sometimes it is the parent who firmly decides that finding a safer, friendlier, smaller space in the company of others would be preferable to the loneliness of long days and nights alone in what was once the bustling family home.

While alternatives abound, theoretically, the slog through options often reveals major flaws that must be understood and overcome in order to make not only a coherent decision, but the “right” decision for the individual concerned. The option to buy into assisted living communities has grown over the past decade as one that continues to create equity for the elder. It is no surprise, however, to learn that in today’s rough economy with home values and assets of nearly every type losing value that many families are rethinking this decision.

It is not uncommon that entrance fees for many retirement communities run into six figures. Typically, once the family and individual settle on the community with the right fit, a significant amount is put on the table as a down payment, often 10% or higher. Next steps include selling the primary home to get the rest of the cash to buy into the community fully. Often the fine print includes options to dissolve the relationship, generally dependent on the management of the facility selling that “unit” and returning a certain percentage to the individual or heirs. The previously growing trend for seniors to pay $200,000 or more to become part of an established community with a continuum of care from independent living to assisted living to full nursing care is now taking a sharp nosedive.

As personal incomes and investments have diminished during this worst of economic times, individuals and their families are rejecting these options perceived as unrealistically expensive. With devalued homes the problem takes on even more seriousness as people want to hold on longer to their properties in the hope the values will return. Of concern, too, is that buying into a retirement community will also lose its value. Handing over $200,000 today is no guarantee that in a few years when a change might be needed that unit will have retained enough value to make the “buy back” viable. Letting the retired living company have the full benefit of someone else’s savings strikes many nowadays as foolhardy. Some, such as Spectrum Retirement Communities offer monthly payment plans as an alternative, but this trend is slow to develop across the industry. Such an approach compromises the funding of building new communities, a practice that is leading some of the biggest names in the business into deep financial problems.

Running retirement communities is a costly venture and some of the well-known players in the industry are showing signs of stress, if not outright despair. Erickson Retirement Communities, one of the nation’s largest, filed for bankruptcy protection under Chapter 11 on October 19, 2009. One of the outcomes of this restructuring will be a separation of the real estate side of the business from the retirement community management side.

While these economic realities add another set of issues to the debate about aging at home, defining “home” will continue to be one of the most personal matters we and our families face.

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